What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-03 compared with 2022-08-09 · 168 added, 194 removed, 368 unchanged (50% of the section changed)

22 unchanged sentences

• our ability to adapt to technological change and continue to innovate;

• economic and financial conditions;

• global economic and financial market conditions and uncertainties;

• the growth of demand for cloud-based, digital transformation applications;

5 unchanged sentences

• our plans with respect to foreign currency exchange risk and inflation;

• impairments to goodwill and other intangible assets;

• our beliefs regarding how our applications benefit customers and what our competitive strengths are;

13 unchanged sentences

Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

Upland provides cloud-based software applications that enable our customers to drive digital transformation in the following business functions:

• Marketing .

Digital marketing, e-commerce, and customer service teams use our applications to interact with consumers across multiple channels to acquire new customers, drive product and service utilization, resolve issues, and build brand loyalty.

Our applications deliver value to customer experience, or CXM-focused organizations across a variety of use cases including mobile messaging, mobile application marketing, Voice of Customer engagement, or VoC, email marketing, knowledge management and call center productivity.

We also offer customer data platform, or CDP, solutions that provide organizations the ability to unify customer data stored across diverse systems to drive more personalized omnichannel campaigns.

Sales teams employ our applications to drive growth through deeper customer engagement, reduced sales cycle times, and overall improved collaboration between sales, marketing, and other customer-facing functions.

We offer applications that help organizations optimize their sales opportunity and account management processes, coordinate proposal and reference activities, collaborate on the creation and publication of digital content, and gain increased control over key sales and marketing workflows, activities, and budgets.

• Contact Center .

Customer service and support environments use our applications to enable agents to resolve issues and engage customers.

We offer applications that improve customer experience and reduce call volume and cycle times through customer self-service products and VoC technology that captures customer sentiment in real-time.

We also offer products that improve call center agent productivity by providing more direct access to knowledge and to customer sentiment thereby improving both inbound call outcomes and proactive outbound success.

We also provide products that deliver knowledge-based, guided workflows for customer service environments supporting complex products in strict regulatory requirements.

Additional solutions help call center leadership to manage agent performance and measure real-time performance relative to call resolution and customer sentiment, improve performance through gamification, and gather agent feedback to keep employee engagement high.

• Project Management.

Business leaders and Project Management Offices, or PMOs use our applications to optimize project portfolios, balance capacity against demand, improve financial-based decision making, align execution of projects to strategy across large organizations, and manage the entire project delivery lifecycle.

Our applications deliver value to project management across a variety of use cases including continuous improvement, enterprise information tech IT, new product development, and services departments along with industry depth in higher education, public sector, and healthcare IT.

• Information Technology .

IT departments use our applications to manage a variety of IT activities and resources across the enterprise.

Our applications help information technology departments ensure they are delivering against the objectives of the business by helping them select and prioritize the right investments, gain greater control of resource demand and allocation, and track and report benefit realization.

Our applications enable executives to gain better insight into IT spending to help prevent cost overruns and understand the nature of consumption.

• Business Operations .

Multiple functional departments use our applications to streamline operations and accelerate business performance across their value chains.

Our solutions in this area range from supply chain collaboration and factory management, back office document and vendor management, to applications that improve sales responsiveness.

In addition, our products help operations teams compose, automate and exchange documents based on content from existing back-office systems to produce interactive business communications, while maintaining compliance and reducing production costs.

• Human Resources and Legal .

Human resources, or HR, legal departments, and law firms use our applications to improve collaboration and operational control and streamline routine processes.

We offer applications that automate document management and workflow including, contracts, records, and other documentation that require enhanced security and compliance requirements.

Other applications support HR-specific workflows including onboarding, employee management, termination, HR support, and time and expense management.

We sell our software applications primarily through a direct sales organization comprised of inside sales and field sales personnel.

8 unchanged sentences

Our revenue has grown from $98.0 million in 2017 to $302.0 million in 2021, representing a compound annual growth rate of 33%.

During the six months ended June 30, 2022 foreign revenue as a percent of total revenue increased to 31% compared to 28% during the six months ended June 30, 2021.

During the nine months ended September 30, 2022 foreign revenue as a percent of total revenue increased to 30% compared to 28% during the nine months ended September 30, 2021.

See “ Note 11.

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This will expand our product library, customer base, and market access resulting in increased benefits of scale.

Consistent with our growth strategy, we have made 31 acquisitions from February 2012 through June 30, 2022.

Consistent with our growth strategy, we have made 31 acquisitions from February 2012 through September 30, 2022.

COVID-19 Impact

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which has created significant economic uncertainty across the globe and has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.

The ongoing spread of COVID-19 remains a global pandemic, compounded with the discovery of new COVID-19 variants (such as Delta and Omicron).

However, with the gradual easing of COVID-19 lockdown restrictions globally and progress made in the development and distribution of vaccines and boosters, stability in the markets have continued to improve.

As such, the Company gradually picked up acquisition activity in 2021 and continued into the first quarter of 2022.

We cannot predict the extent to which the COVID-19 outbreak will continue to impact our business or operating results, which is highly dependent on inherently uncertain future developments, including the severity of COVID-19 and the actions taken by governments and private businesses in relation to COVID-19 containment.

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The period-to-period comparisons of results of operations are not necessarily indicative of results for future periods.

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

29 unchanged sentences

Loss before provision for income taxes (7,569) (9) % (14,363) (19) % (47,391) (20) % (56,945) (26) %

Benefit from (provision for) income taxes 472 1 % (1,538) (2) % 598 — % 2,856 3 %

Benefit from income taxes 1,056 1 % 3,348 5 % 1,654 1 % 6,204 4 %

Net loss (6,513) (8) % (11,015) (14) % (45,737) (19) % (50,741) (22) %

Preferred stock dividends and accretion (546) (1) % — — % (546) — % — — %

Net loss attributable to common shareholders $ (7,059) (9) % $ (11,015) (14) % $ (46,283) (19) % $ (50,741) (22) %

Net loss per common share:

Net loss per common share, basic and diluted $ (0.22) $ (0.36) $ (1.47) $ (1.68)

3 unchanged sentences

Stockholders' Equity” .

(2) Includes General and administrative stock-based compensation of $12.1 million and $10.4 million for the three months June 30, 2022 and June 30, 2021, respectively, and $21.1 million and $26.0 million for the six months ended June 30, 2022 and June 30, 2021, respectively.

General and administrative expense excluding stock-based compensation as a percentage of total revenues was 12% and 11% for the three months ended June 30, 2022 and June 30, 2021, respectively, and 13% and 12% for the six months ended June 30, 2022 and June 30, 2021, respectively.

(3) Includes depreciation and amortization of $3.1 million and $2.9 million for the three months ended June 30, 2022 and June 30, 2021, respectively, and $6.3 million and $5.6 million for the six months ended June 30, 2022 and June 30, 2021, respectively.

Comparison of the Three and Six Months Ended June 30, 2022 and 2021

Three Months Ended June 30, Six Months Ended June 30,

(2) Includes General and administrative stock-based compensation of $5.7 million and $9.2 million for the three months September 30, 2022 and September 30, 2021, respectively, and $26.8 million and $35.2 million for the nine months ended September 30, 2022 and September 30, 2021, respectively.

General and administrative expense excluding stock-based compensation as a percentage of total revenues was 11% and 11% for the three months ended September 30, 2022 and September 30, 2021, respectively, and 12% and 12% for the nine months ended September 30, 2022 and September 30, 2021, respectively.

(3) Includes depreciation and amortization of $3.0 million and $3.0 million for the three months ended September 30, 2022 and September 30, 2021, respectively, and $9.4 million and $8.6 million for the nine months ended September 30, 2022 and September 30, 2021, respectively.

Comparison of the Three and Nine Months Ended September 30, 2022 and 2021

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

2022 2021 % Change 2022 2021 % Change

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Total revenue 100% 100% 100% 100%

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

2 unchanged sentences

Total revenue $ 79,549 $ 76,053 $ 238,492 $ 226,286

$ 80,227 $ 76,264 $ 158,943 $ 150,233

Subscription and support revenue from acquisitions not fully in the prior year comparative period (1)

5,819 — 36,946 16,937

Perpetual license revenue 1,684 685 5,320 1,452

7 unchanged sentences

$ 66,400 $ 68,363 $ 177,997 $ 183,949

(1) After the reduction of $1.7 million and $3.6 million purchase accounting deferred revenue discount for the three and six months ended June 30, 2022, respectively.

(1) After the reduction of $1.2 million and $4.8 million purchase accounting deferred revenue discount for the three and nine months ended September 30, 2022, respectively.

(2) Subscription and support revenue from Sunset Assets is revenue related to the divestiture and sunset of certain minor non-strategic customer contracts (collectively referred to as “Sunset Assets”).

2 unchanged sentences

(5) Non-GAAP Core Organic Revenue excludes revenues from acquisitions closed during or subsequent to the prior year comparable period, Perpetual license revenues, Professional services revenues, Revenue from Sunset Assets, Overage Charges and Political Revenue.

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

2 unchanged sentences

Subscription and support revenue $ 75,095 $ 72,264 $ 223,739 $ 215,322

$ 75,017 0 $ 72,405 $ 148,644 $ 143,058

Subscription and support revenue from acquisitions not fully in the prior year comparative period (1)

5,819 — 36,946 16,937

Subscription and support revenue from Sunset Assets (2)

5 unchanged sentences

$ 66,400 $ 68,363 $ 177,997 $ 183,949

(1) After the reduction of $1.6 million and $3.6 million purchase accounting deferred revenue discount for the three and six months ended June 30, 2022, respectively.

(1) After the reduction of $1.2 million and $4.8 million purchase accounting deferred revenue discount for the three and nine months ended September 30, 2022, respectively.

2 unchanged sentences

(5) Non-GAAP Core Organic Revenue excludes revenues from acquisitions closed during or subsequent to the prior year comparable period, Revenue from Sunset Assets, Overage Charges and Political Revenue.

For the Three Months Ended June 30, 2022

Total revenue was $80.2 million in the three months ended June 30, 2022, compared to $76.3 million in the three months ended June 30, 2021, an increase of $3.9 million, or 5%.

Total revenue growth includes a negative impact of 3 percentage points from changes in foreign currency exchange rates (“FX”).

For the Three Months Ended September 30, 2022

Total revenue was $79.5 million in the three months ended September 30, 2022, compared to $76.1 million in the three months ended September 30, 2021, an increase of $3.5 million, or 5%.

Total revenue growth includes a negative impact of 3% from changes in foreign currency exchange rates (“FX”).

Our organic business excludes acquisitions closed during or subsequent to the prior year comparable period and business operations related to Sunset Assets (the “Organic Business”).

The acquisitions not fully in the comparable period contributed $10.0 million to the increase in the three months ended June 30, 2022.

The acquisitions not fully in the comparable period contributed $7.5 million to the increase in the three months ended September 30, 2022.

Total revenue related to Perpetual license and Professional services related to our Organic Business declined by $1.0 million.

1 unchanged sentence

Total revenue related to Overage Charges declined by $0.8 million as a result of variable demand in the quarter.

The three months ended June 30, 2021 included $0.2 million of Political Revenue which did not repeat in the current quarter and will not repeat for the remainder of 2022.

Therefore, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $3.0 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

After removing the negative FX impact on our revenue, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $1.7 million in the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

Subscription and support revenue was $75.0 million in the three months ended June 30, 2022, compared to $72.4 million in the three months ended June 30, 2021, an increase of $2.6 million, or 4%.

Subscription and support revenue growth includes a negative impact of 2 percentage points from changes in FX.

The acquisitions not fully in the comparable period contributed $7.2 million to the increase in subscription and support revenue in the three months ended June 30, 2022.

Therefore, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $2.0 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

After removing the negative FX impact on our revenue, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $0.5 million in the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

Subscription and support revenue was $75.1 million in the three months ended September 30, 2022, compared to $72.3 million in the three months ended September 30, 2021, an increase of $2.8 million, or 4%.

Subscription and support revenue growth includes a negative impact of 3% from changes in FX.

The acquisitions not fully in the comparable period contributed $5.8 million to the increase in subscription and support revenue in the three months ended September 30, 2022.

Subscription and support revenue related to our Sunset Assets decreased $0.2 million in the quarter as a result of decreased sales and marketing focus on those Sunset Assets.

Subscription and support revenue related to Overage Charges declined by $0.8 million as a result of variable demand in the quarter.

The three months ended June 30, 2021 included $0.2 million of Political Revenue which did not repeat in the current quarter and will not repeat for the remainder of 2022.

Therefore, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $3.0 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

Perpetual license revenue was $1.9 million in the three months ended June 30, 2022, compared to $0.4 million in the three months ended June 30, 2021.

The acquisitions not fully in the comparable period contributed $1.5 million to the increase in perpetual license revenue in the three months ended June 30, 2022 primarily from the acquisition of Objectif Lune.

Therefore, perpetual license revenue for our Organic Business for the three months ended June 30, 2022 was flat compared to the three months ended June 30, 2021.

Professional services revenue was relatively flat at $3.4 million in both the three months ended June 30, 2022 as well as in the three months ended June 30, 2021.

The acquisitions not fully in the comparable period contributed $1.3 million to the increase in professional services revenue in the three months ended June 30, 2022.

Therefore, professional services revenue for our Organic Business decreased by $1.3 million in the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily related to our discipline around not accepting unprofitable professional services projects.

For the Six Months Ended June 30, 2022

Total revenue was $158.9 million in the six months ended June 30, 2022, compared to $150.2 million in the six months ended June 30, 2021, an increase of $8.7 million, or 6%.

Total revenue growth includes a negative impact of 1.5 percentage points from changes in FX.

The acquisitions not fully in the comparable period contributed $18.4 million to the increase in the six months ended June 30, 2022.

Perpetual license revenue was $1.7 million in the three months ended September 30, 2022, compared to $0.7 million in the three months ended September 30, 2021.

The acquisitions not fully in the comparable period contributed $0.9 million to the increase in perpetual license revenue in the three months ended September 30, 2022 primarily from the acquisition of Objectif Lune.

Therefore, perpetual license revenue for our Organic Business for the three months ended September 30, 2022 increased by $0.1 million compared to the three months ended September 30, 2021.

Professional services revenue was $2.8 million in the three months ended September 30, 2022 compared to $3.1 million in the three months ended September 30, 2021.

The acquisitions not fully in the comparable period contributed $0.8 million to the increase in professional services revenue in the three months ended September 30, 2022.

Therefore, professional services revenue for our Organic Business decreased by $1.1 million in the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily related to our discipline around not accepting unprofitable professional services projects.

For the Nine Months Ended September 30, 2022

Total revenue was $238.5 million in the nine months ended September 30, 2022, compared to $226.3 million in the nine months ended September 30, 2021, an increase of $12.2 million, or 5%.

Total revenue growth includes a negative impact of 2% from changes in FX.

The acquisitions not fully in the comparable period contributed $25.8 million to the increase in the nine months ended September 30, 2022.

Total revenue related to Perpetual license and Professional services related to our Organic Business declined by $1.9 million.

Total revenue related to Sunset Assets decreased by $0.7 million as a result of decreased sales and marketing focus on those Sunset Assets.

Total revenues related to Overage Charges declined by $3.2 million as a result of variable demand during the first half of 2022.

The six months ended June 30, 2021 included $1.0 million in Political Revenue, which did not repeat in the first half of 2022 and will not repeat for the remainder of 2022.

Therefore, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $3.9 million in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

After removing the negative FX impact on our revenue, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $2.6 million in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Subscription and support revenue was $148.6 million in the six months ended June 30, 2022, compared to $143.1 million in the six months ended June 30, 2021, an increase of $5.5 million, or 4%.

Subscription and support revenue growth includes a negative impact of 1.6 percentage points from changes in FX.

The acquisitions not fully in the comparable period contributed $14.0 million to the increase in subscription and support revenue in the six months ended June 30, 2022.

Total revenues related to Overage Charges declined by $4.0 million as a result of variable demand during the first nine months of 2022.

The nine months ended September 30, 2021 included $1.0 million in Political Revenue, which did not repeat in the first nine months of 2022 and will not repeat for the remainder of 2022.

Therefore, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $6.0 million in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

After removing the negative FX impact on our revenue, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $4.0 million in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

Subscription and support revenue was $223.7 million in the nine months ended September 30, 2022, compared to $215.3 million in the nine months ended September 30, 2021, an increase of $8.4 million, or 4%.

Subscription and support revenue growth includes a negative impact of 1% from changes in FX.

The acquisitions not fully in the comparable period contributed $20.0 million to the increase in subscription and support revenue in the nine months ended September 30, 2022.

Subscription and support revenue related to our Sunset Assets decreased $0.6 million as a result of decreased sales and marketing focus on those Sunset Assets.

Subscription and support revenues related to Overage Charges declined by $3.2 million as a result of variable demand in the six months ended June 30, 2022.

The six months ended June 30, 2021 included $1.0 million of Political Revenues which did not repeat in the first half of 2022 and will not repeat for the remainder of 2022.

Therefore, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $3.9 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

After removing the negative FX impact on our revenue, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $2.6 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Perpetual license revenue was $3.6 million in the six months ended June 30, 2022, compared to $0.8 million in the six months ended June 30, 2021, an increase of $2.8 million, or 374%.

Subscription and support revenues related to Overage Charges declined by $4.0 million as a result of variable demand in the nine months ended September 30, 2022.

The nine months ended September 30, 2021 included $1.0 million of Political Revenues which did not repeat in the first nine months of 2022 and will not repeat for the remainder of 2022.

Therefore, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $6.0 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

After removing the negative FX impact on our revenue, net of these non-core revenues, our Non-GAAP Core Organic Revenue decreased by $4.0 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

Perpetual license revenue was $5.3 million in the nine months ended September 30, 2022, compared to $1.5 million in the nine months ended September 30, 2021, an increase of $3.8 million, or 267%.

Perpetual license revenue related to our Sunset Assets decreased by $0.1 million as a result of decreased sales and marketing focus on those Sunset Assets.

The acquisitions not fully in the comparable period contributed $3.0 million to the increase in perpetual license revenue in the six months ended June 30, 2022.

Therefore, perpetual license revenue from our Organic Business decreased by $0.1 million in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Professional services revenue was $6.7 million in the six months ended June 30, 2022, compared to $6.4 million in the six months ended June 30, 2021, an increase of $0.3 million, or 4%.

The acquisitions not fully in the comparable period contributed $1.4 million to the increase in professional services revenue in the six months ended June 30, 2022.

Professional services revenue related to our Sunset Assets decreased by $0.1 million as a result of decreased sales and marketing focus on those Sunset Assets.

Therefore, professional services revenue from our Organic Business decreased by $1.1 million in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily related to our discipline around not accepting unprofitable professional services projects.

The acquisitions not fully in the comparable period contributed $3.9 million to the increase in perpetual license revenue in the nine months ended September 30, 2022.

Therefore, perpetual license revenue from our Organic Business for the nine months ended September 30, 2022 was flat compared to the nine months ended September 30, 2021.

Professional services revenue was $9.4 million in the nine months ended September 30, 2022, compared to $9.5 million in the nine months ended September 30, 2021, a decrease of $0.1 million, or 1%.

The acquisitions not fully in the comparable period contributed $1.9 million to the increase in professional services revenue in the nine months ended September 30, 2022.

Therefore, professional services revenue from our Organic Business decreased by $2.0 million in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily related to our discipline around not accepting unprofitable professional services projects.

Cost of Revenue and Gross Profit Percentage

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 % Change 2022 2021 % Change

16 unchanged sentences

Stock Compensation $ 510 $ 539 $ 1,487 $ 1,544

For the Three Months Ended June 30, 2022

Cost of subscription and support revenue was $24.1 million in the three months ended June 30, 2022, compared to $23.2 million in the three months ended June 30, 2021, an increase of $0.9 million, or 4%.

For the Three Months Ended September 30, 2022

Cost of subscription and support revenue was $23.6 million in the three months ended September 30, 2022, compared to $23.0 million in the three months ended September 30, 2021, an increase of $0.6 million, or 3%.

The acquisitions not fully in the comparable period contributed $0.9 million to cost of subscription and support revenue, primarily related to costs associated with the delivery of the newly acquired products.

Cost of subscription and support revenue related to our Sunset Assets decreased $0.1 million.

Therefore, cost of subscription and support revenue for our Organic Business decreased by $0.6 million, primarily related to a decrease in telecom messaging costs related to a year over year reduction in CXM usage as a result of cyclical highs in 2021 related to US presidential campaigns.

Cost of professional services and other revenue was $2.4 million in the three months ended June 30, 2022, compared to $1.9 million in the three months ended June 30, 2021, an increase of $0.6 million, or 31%.

Therefore, cost of subscription and support revenue for our Organic Business decreased by $0.3 million, primarily related to a decrease in telecom messaging costs.

Cost of professional services and other revenue was $2.2 million in the three months ended September 30, 2022, compared to $1.8 million in the three months ended September 30, 2021, an increase of $0.4 million, or 18%.

The acquisitions not fully in the comparable period contributed $0.7 million in the cost of professional services revenue.

Therefore, the cost of professional services for our Organic Business decreased by $0.3 million.

For the Six Months Ended June 30, 2022

Cost of subscription and support revenue was $46.2 million in the six months ended June 30, 2022, compared to $45.8 million in the six months ended June 30, 2021, an increase of $0.4 million, or 1%.

For the Nine Months Ended September 30, 2022

Cost of subscription and support revenue was $69.7 million in the nine months ended September 30, 2022, compared to $68.8 million in the nine months ended September 30, 2021, an increase of $0.9 million, or 1%.

The acquisitions not fully in the comparable period contributed $4.5 million to the increase to cost of subscription and support revenue, primarily related to costs associated with the delivery of the BA Insight, Objectif Lune, Panviva and BlueVenn products.

Cost of subscription and support revenue related to our Sunset Assets decreased $0.2 million primarily related to decreased hosting and infrastructure costs.

Therefore, cost of subscription and support revenue for the organic portion of our business decreased by $3.2 million, primarily related to decreases in personnel and related costs and messaging costs related to an increase in CXM usage from US presidential campaigns, partially offset by an increase in hosting and infrastructure costs.

Cost of professional services revenue was $5.1 million in the six months ended June 30, 2022, compared to $3.6 million in the six months ended June 30, 2021, an increase of $1.5 million, or 42%.

Therefore, cost of subscription and support revenue for the organic portion of our Organic Business decreased by $3.4 million, primarily related to decreases in personnel and related costs and telecom messaging costs.

Cost of professional services revenue was $7.3 million in the nine months ended September 30, 2022, compared to $5.4 million in the nine months ended September 30, 2021, an increase of $1.9 million, or 34%.

The acquisitions not fully in the comparable period contributed $2.2 million to the increase to cost of professional services revenue, primarily related to an increase in personnel and related costs.

2 unchanged sentences

Sales and Marketing Expense

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 % Change 2022 2021 % Change

5 unchanged sentences

Stock Compensation $ 612 $ 1,636 $ 3,584 $ 4,392

For the Three Months Ended June 30, 2022

Sales and marketing expense was $15.3 million in the three months ended June 30, 2022, compared to $14.3 million in the three months ended June 30, 2021, an increase of $1.0 million, or 7%.

For the Three Months Ended September 30, 2022

Sales and marketing expense was flat of $14.4 million in the three months ended September 30, 2022, compared to $14.4 million in the three months ended September 30, 2021.

The acquisitions not fully in the comparable period contributed $1.2 million to the increase in sales and marketing expense, primarily consisting of personnel and related costs.

Therefore, sales and marketing expense for our Organic Business decreased $0.8 million primarily attributable to decreases in personnel and related costs, partially offset by increases related to sales commissions expense associated with our continued go-to-market investments.

For the Six Months Ended June 30, 2022

Sales and marketing expense was $30.9 million in the six months ended June 30, 2022, compared to $26.7 million in the six months ended June 30, 2021, an increase of $4.2 million, or 16%.

Therefore, sales and marketing expense for our Organic Business decreased $1.2 million primarily attributable to decreases in personnel and related costs.

For the Nine Months Ended September 30, 2022

Sales and marketing expense was $45.3 million in the nine months ended September 30, 2022, compared to $41.1 million in the nine months ended September 30, 2021, an increase of $4.2 million, or 10%.

The acquisitions not fully in the comparable period contributed $5.4 million to the increase in sales and marketing expense, primarily consisting of personnel and related costs.

Therefore, sales and marketing expense for our Organic Business increased by $0.3 million, primarily attributable to sales commission expense associated with our ongoing go-to-market investments.

Therefore, sales and marketing expense for our Organic Business decreased by $1.1 million, primarily attributable to decreases in personnel and related costs.

Research and Development Expense

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 % Change 2022 2021 % Change

5 unchanged sentences

Stock Compensation $ 701 $ 671 $ 2,107 $ 2,327

For the Three Months Ended June 30, 2022

Research and development expense was $11.7 million in the three months ended June 30, 2022, compared to $11.1 million in the three months ended June 30, 2021, an increase of $0.6 million, or 5%.

For the Three Months Ended September 30, 2022

Research and development expense was $11.6 million in the three months ended September 30, 2022, compared to $10.4 million in the three months ended September 30, 2021, an increase of $1.2 million, or 12%.

The acquisitions not fully in the comparable period contributed $1.6 million to the increase in research and development expense primarily consisting of personnel and related costs.

Therefore, research and development expense related to our Organic Business decreased by $0.4 million primarily related to personnel and related costs.

For the Six Months Ended June 30, 2022

Research and development expense was $23.7 million in the six months ended June 30, 2022, compared to $22.1 million in the

six months ended June 30, 2021, an increase of $1.6 million, or 8%.

For the Nine Months Ended September 30, 2022

Research and development expense was $35.4 million in the nine months ended September 30, 2022, compared to $32.5 million in the nine months ended September 30, 2021, an increase of $2.9 million, or 9%.

The acquisitions not fully in the comparable period contributed $5.5 million to the increase in research and development expense primarily consisting of personnel and related costs.

Research and development expense related to our Sunset Assets decreased by $0.1 million primarily due to reductions in personnel costs.

Research and development expense related to our Sunset Assets decreased by $0.2 million

primarily due to reductions in personnel costs.

Therefore, research and development costs for our Organic Business decreased by $2.4 million primarily related to personnel and related costs.

General and Administrative Expense

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 % Change 2022 2021 % Change

5 unchanged sentences

Stock Compensation $ 5,704 $ 9,201 $ 26,845 $ 35,158

For the Three Months Ended June 30, 2022

General and administrative expense was $21.8 million in the three months ended June 30, 2022, compared to $19.2 million in the three months ended June 30, 2021, an increase of $2.6 million, or 14%.

For the Three Months Ended September 30, 2022

General and administrative expense was $14.7 million in the three months ended September 30, 2022, compared to $17.7 million in the three months ended September 30, 2021, a decrease of $3.0 million, or 17%.

An increase in general administrative expense of $0.6 million was due to the acquisitions not fully in the comparable period.

In addition, general and administrative expense increased incrementally by $1.9 million, which was driven primarily by higher non-cash stock compensation expense, primarily as a result of the acceleration of stock-based compensation expense.

See “ Note 9.

Stockholders' Equity—Stock-Based Compensation ”, for further details.

For the Six Months Ended June 30, 2022

General and administrative expense was $41.4 million in the six months ended June 30, 2022, compared to $43.6 million in the six months ended June 30, 2021, a decrease of $2.2 million, or 5%.

In addition, general and administrative expense decreased by $3.6 million, which was driven primarily by lower non-cash stock compensation expense.

For the Nine Months Ended September 30, 2022

General and administrative expense was $56.1 million in the nine months ended September 30, 2022, compared to $61.3 million in the nine months ended September 30, 2021, a decrease of $5.2 million, or 8%.

An increase in general administrative expense of $2.3 million was due to the acquisitions not fully in the comparable period, which consisted primarily of personnel and related costs and administrative expenses.

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Depreciation and Amortization Expense

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 % Change 2022 2021 % Change

8 unchanged sentences

Total depreciation and amortization 13% 14% 13% 14%

For the Three Months Ended June 30, 2022

Depreciation and amortization expense was $10.8 million in the three months ended June 30, 2022, compared to $10.3 million in the three months ended June 30, 2021, an increase of $0.5 million, or 5%.

The acquisitions not fully in the comparable period increased depreciation and amortization expense by $1.5 million, primarily related to acquired intangible assets such as

customer relationships, developed technology and tradenames.

This increase was partially offset by a decrease of $1.0 million in depreciation and amortization expense from assets becoming fully depreciated and amortized.

For the Six Months Ended June 30, 2022

Depreciation and amortization expense was $21.9 million in the six months ended June 30, 2022, compared to $20.0 million in the six months ended June 30, 2021, an increase of $1.9 million, or 9%.

For the Three Months Ended September 30, 2022

Depreciation and amortization expense was $10.1 million in the three months ended September 30, 2022, compared to $10.8 million in the three months ended September 30, 2021, a decrease of $0.7 million, or 6%.

The acquisitions not fully in the comparable period increased depreciation and amortization expense by $1.1 million, primarily related to acquired intangible assets such as customer relationships, developed technology and tradenames.

Therefore, depreciation and amortization expense for our Organic Business decreased by $1.4 million in the comparative periods.

Depreciation and amortization expense related to our Sunset Assets decreased by $0.1 million.

Therefore, depreciation and amortization expense from our Organic Business decreased by $1.7 million from assets becoming fully depreciated and amortized.

For the Nine Months Ended September 30, 2022

Depreciation and amortization expense was $32.0 million in the nine months ended September 30, 2022, compared to $30.8 million in the nine months ended September 30, 2021, an increase of $1.2 million, or 4%.

The acquisitions not fully in the comparable period increased depreciation and amortization expense by $4.2 million, primarily related to acquired intangible assets such as customer relationships, developed technology and tradenames.

Depreciation and amortization expense related to our Sunset Assets decreased by $0.1 million.

Therefore, depreciation and amortization expense for our Organic Business decreased by $2.9 million from assets becoming fully depreciated and amortized.

Acquisition-related Expenses

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 % Change 2022 2021 % Change

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Generally, without new acquisition activity, acquisition related expenses decline in subsequent sequential quarters and are no longer incurred after the first anniversary of the last closed acquisition.

For the Three Months Ended June 30, 2022

Acquisition-related expense was $4.9 million in the three months ended June 30, 2022, compared to $5.5 million in the three months ended June 30, 2021, a decrease of $0.6 million, or 11%.

During the three months ended June 30, 2022 and June 30, 2021 transaction related expenses were $0.4 million and $2.0 million, respectively, and transformational expenses were $4.5 million and $3.5 million, respectively.

For the Three Months Ended September 30, 2022

Acquisition-related expense was $3.6 million in the three months ended September 30, 2022, compared to $3.7 million in the three months ended September 30, 2021, a decrease of $0.1 million, or 3%.

During the three months ended September 30, 2022, transaction related expense was a gain of $0.3 million compared to and an expense of $0.1 million for the three months ended September 30, 2021.

Transformational expenses were $3.9 million and $3.6 million during the three months ended September 30, 2022 and 2021, respectively.

The transformational expenses in both the current and year ago periods were primarily related to temporary transitional personnel and related costs along with accelerated rent related expenses incurred in conjunction with the closures of offices of our acquired companies as we consolidate and integrate these acquisitions.

We had no new acquisitions during the three months ended June 30, 2022 and closed one acquisition during the three months ended June 30, 2021.

Transformation expenses in the three months ended June 30, 2022 include expenses related to acquisitions closed in 2022 as well the three acquisitions closed in 2021 compared to transformation expenses in the three months ended June 30, 2021, which included expenses related to the two acquisitions closed as of March 31, 2021 and one acquisition from 2020.

In addition, Acquisition-related expense for the three months ended June 30, 2021 includes a gain of $2.7 million related to a decrease in the fair value of earnout liabilities due to sellers related to the BlueVenn and Second Street acquisitions which was partially offset by a loss on sublease of $1.9 million related to the change in underlying assumptions related to a subtenant.

For the Six Months Ended June 30, 2022

Acquisition related expense was $15.3 million the six months ended June 30, 2022, compared to $15.1 million in the six months ended June 30, 2021 an increase of $0.2 million, or 1%.

During the six months ended June 30, 2022 and June 30, 2021 transaction related expenses were $4.9 million and $6.1 million, respectively, and transformational expenses were $10.4 million and $9.0 million, respectively.

We had no new acquisitions during the three months ended September 30, 2022 and 2021, respectively.

Transformation expenses in the three months ended September 30, 2022 include expenses related to acquisitions closed in 2022.

In addition, Acquisition-related expense for the three months ended September 30, 2021 includes a gain of $0.8 million related to a decrease in the fair value of earnout liabilities due to sellers related to the BlueVenn and Second Street acquisitions.

For the Nine Months Ended September 30, 2022

Acquisition related expense was $18.9 million the nine months ended September 30, 2022, compared to $18.8 million in the nine months ended September 30, 2021 an increase of $0.1 million, or 1%.

During the nine months ended September 30, 2022 and September 30, 2021 transaction related expenses were $4.6 million and $6.2 million, respectively, and transformational expenses were $14.3 million and $12.6 million, respectively.

These accelerated rent related expenses decreased $3.5 million to $1.2 million during the six months ended June 30, 2022 from $4.8 million during the same period in 2021.

In addition, Acquisition-related expense for the six months ended June 30, 2021 includes a gain of $2.7 million related to a decrease in the fair value of earnout liabilities due to sellers related to the BlueVenn and Second Street acquisitions.

These accelerated rent related expenses decreased $4.0 million to $0.9 million during the nine months ended September 30, 2022 from $4.9 million during the same period in 2021.

Transformation expenses in 2021 include expenses related to the three acquisitions closed in 2021 as well as the one acquisition closed in 2020 compared to transformation expenses in 2022 related to the two acquisitions closed in 2022 and three acquisitions closed in 2021.

In addition, Acquisition-related expense for the nine months ended September 30, 2021 includes a gain of $3.5 million related to a decrease in the fair value of earnout liabilities due to sellers related to the BlueVenn and Second Street acquisitions.

Other Income (Expense)

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 % Change 2022 2021 % Change

8 unchanged sentences

Total other expense (9)% (11)% (9)% (11)%

For the Three Months Ended June 30, 2022

Interest expense, net was $7.8 million in the three months ended June 30, 2022 compared to $7.9 million in the three months ended June 30, 2021 a decrease in interest expense of $0.1 million or 2%.

Other income was $1.8 million in the three months ended June 30, 2022, compared to other expense of $0.4 million in the three months ended June 30, 2021.

Other income recognized during the three months ended June 30, 2022 were related primarily to currency exchange gains.

For the Six Months Ended June 30, 2022

Interest expense was $15.5 million in the six months ended June 30, 2022, compared to $15.7 million in the six months ended June 30, 2021, a decrease in interest expense of $0.2 million, or 1%.

Other income was $1.4 million in the six months ended June 30, 2022, compared to other expense of $0.2 million in the six months ended June 30, 2021.

Other income recognized during the six months ended June 30, 2022 were related primarily to currency exchange gains.

Benefit from (Provision for) Income Taxes

Three Months Ended June 30, Six Months Ended June 30,

For the Three Months Ended September 30, 2022

Interest expense, net was $7.4 million in the three months ended September 30, 2022 compared to $8.0 million in the three months ended September 30, 2021 a decrease in interest expense of $0.6 million or 8%, due to an increase in interest income on our idle cash and a decrease in outstanding borrowings on our Credit Facility.

Other income was $0.3 million in the three months ended September 30, 2022, compared to other expense of $0.7 million in the three months ended September 30, 2021.

Other income recognized during the three months ended September 30, 2022 was related primarily to currency exchange gains.

For the Nine Months Ended September 30, 2022

Interest expense was $22.9 million in the nine months ended September 30, 2022, compared to $23.7 million in the nine months ended September 30, 2021, a decrease in interest expense of $0.8 million, or 4%, due to an increase in interest income on our idle cash and a decrease in outstanding borrowings on our Credit Facility.

Other income was $1.7 million in the nine months ended September 30, 2022, compared to other expense of $0.8 million in the nine months ended September 30, 2021.

Other income recognized during the nine months ended September 30, 2022 were related primarily to currency exchange gains.

Benefit from Income Taxes

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

2022 2021 % Change 2022 2021 % Change

(dollars in thousands)

Benefit from (provision for) income taxes $ 472 $ (1,538) (131) % $ 598 $ 2,856 (79) %

Benefit from income taxes $ 1,056 $ 3,348 (68) % $ 1,654 $ 6,204 (73) %

Percentage of total revenue 1% 5% 1% 4%

For the Three Months Ended June 30, 2022

Benefit from income taxes was $0.5 million in the three months ended June 30, 2022, compared to a provision for income taxes of $1.5 million in the three months ended June 30, 2021, resulting in a decrease in provision for income taxes of $2.0 million.

The benefit from income taxes for the three months ended June 30, 2022 related primarily to foreign income taxes associated with our combined non-U.S.

For the Three Months Ended September 30, 2022

Benefit from income taxes was $1.1 million in the three months ended September 30, 2022, compared to a benefit for income taxes of $3.3 million in the three months ended September 30, 2021, resulting in a decrease in benefit from income taxes of $2.2 million.

The benefit from income taxes for the three months ended September 30, 2022 related primarily to foreign income taxes associated with our combined non-U.S.

operations and the deferred tax benefit attributable to the release of valuation allowance related to the acquisition of deferred tax liabilities associated with business combinations occurring during the nine months ended September 30, 2022.

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.

The expense for the three months ended June 30, 2021 related

primarily to the release of valuation allowance related to the acquisition of deferred tax liabilities associated with business combinations completed during the period.

For the Six Months Ended June 30, 2022

The benefit from income taxes was $0.6 million in the six months ended June 30, 2022, compared to a benefit from income taxes of $2.9 million in the six months ended June 30, 2021, resulting in a decrease of benefit from income taxes of $2.3 million.

The benefit from income taxes for the three months ended September 30, 2021

related primarily to deferred tax benefits attributable to the release of valuation allowance related to acquired deferred tax liabilities associated with business combinations, the deferred tax benefit attributable to the reduction in deferred tax liabilities associated with the transfer of intangibles between foreign and domestic jurisdictions, and income tax benefits associated with our combined non-U.S.

For the Nine Months Ended September 30, 2022

The benefit from income taxes was $1.7 million in the nine months ended September 30, 2022, compared to a benefit from income taxes of $6.2 million in the nine months ended September 30, 2021, resulting in a decrease of benefit from income taxes of $4.6 million.

This decrease was due primarily to decreased benefits recognized during the current period attributable to the release of valuation allowances associated with acquisitions of domestic entities with deferred tax liabilities that, upon acquisition, allow us to recognize certain deferred tax assets that had previously been offset by a valuation allowances.

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The following table represents a reconciliation of net loss from continuing operations, the most comparable GAAP measure, to Adjusted EBITDA for each of the periods indicated.

Three Months Ended June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

5 unchanged sentences

Other expense (income), net (339) 650 (1,698) 812

Provision for (benefit from) income taxes (472) 1,538 (598) (2,856)

Benefit from income taxes (1,056) (3,348) (1,654) (6,204)

Stock-based compensation expense 7,527 12,047 34,023 43,421

Acquisition-related expense 3,586 3,685 18,924 18,805

Non-recurring litigation costs 15 — 15 —

Purchase accounting deferred revenue discount 1,174 1,275 4,766 2,375

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Liquidity and Capital Resources

To date, we have financed our operations primarily through the raising of capital including sales of our common stock, cash from operating activities, and borrowings under our credit facility.

To date, we have financed our operations primarily through the raising of capital including sales of our common stock or our convertible preferred stock, cash from operating activities, and borrowings under our credit facility.

We believe that current cash and cash equivalents, cash flows from operating activities, availability under our existing credit facility, as discussed below, and the ability to offer and sell securities pursuant to our registration statement, as discussed below, will be sufficient to fund our operations for at least the next twelve months.

In addition, we intend to utilize the sources of capital available to us under our Credit Facility and registration statement to support our continued growth via acquisitions within our core enterprise solution suites of complementary technologies and businesses.

As of June 30, 2022, we had cash and cash equivalents of $138.3 million, $60.0 million of available borrowings under our credit facility, as discussed below, and $525.2 million of borrowings outstanding under our credit facility.

As of September 30, 2022, we had cash and cash equivalents of $241.7 million, $60.0 million of available borrowings under our credit facility, as discussed below, and $523.8 million of borrowings outstanding under our credit facility.

As of December 31, 2021, we had cash and cash equivalents of $189.2 million, $60.0 million of available borrowings under our Credit Facility, and $527.9 million of borrowings outstanding under our credit facility.

The $50.9 million decrease in cash and cash equivalents from December 31, 2021 to June 30, 2022 includes $62.4 million in cash paid for our two acquisitions completed during 2022, net of $0.7 million in cash acquired.

Non-cash acquisition date consideration to be paid in future periods related to these acquisitions includes $5.9 million in holdback payments and that are due within 12 to 15 months of the closing dates of the underlying acquisitions.

Our cash and cash equivalents held by our foreign subsidiaries was $24.5 million as of June 30, 2022 and $24.8 million as of December 31, 2021.

The $52.6 million increase in cash and cash equivalents from December 31, 2021 to September 30, 2022 includes $110.5 million in cash proceeds related to our Series A Preferred Stock, net of issuance costs which closed in August 2022.

This was partially offset by $62.4 million in cash paid for our two acquisitions closed in January and February 2022, net of $0.7 million in cash acquired.

Non-cash acquisition date consideration to be paid in future periods related to these acquisitions includes $5.9 million in holdback payments that are due within 12 to 15 months of the closing dates of the underlying acquisitions.

Our cash and cash equivalents held by our foreign subsidiaries was $36.0 million as of September 30, 2022 and $24.8 million as of December 31, 2021.

If these funds held by our foreign subsidiaries are needed for our domestic operations, a repatriation of these funds may require us to accrue and pay dividend withholding taxes in the foreign jurisdictions where applicable and accrue and pay U.S.

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We do not provide for federal income taxes on the undistributed earnings of our foreign subsidiaries.

As of June 30, 2022 and December 31, 2021, we had a working capital surplus of $35.3 million and surplus of $106.5 million, respectively, which includes $103.4 million and $102.8 million of deferred revenue recorded as a current liability as of June 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022 and December 31, 2021, we had a working capital surplus of $156.4 million and surplus of $106.5 million, respectively, which includes $98.7 million and $102.8 million of deferred revenue recorded as a current liability as of September 30, 2022 and December 31, 2021, respectively.

This deferred revenue will be recognized as revenue in future periods in accordance with our revenue recognition policy.

Securities Purchase Agreement

The Securities Purchase Agreement as discussed in “ Note 12.

Subsequent Events ” will provide us an additional $115.0 million in liquidity, which we intend to use for (a) for general corporate purposes and (b) for transaction-related fees and expenses.

The closing is expected promptly following the satisfaction of customary terms and conditions, including the expiration of the

Hart-Scott-Rodino Act notice period.

However, we can provide no assurances that the transaction will close on the expected timeline or at all.

The holders of Series A Preferred Stock will be entitled to dividends (i) at the rate of 4.5% per annum until but excluding the seven year anniversary of the closing, and (ii) at the rate of 7% per annum on and after the seven year anniversary of the closing, and are also entitled to fully participate in any dividends or other distributions declared or paid on our common stock on an as-converted basis.

Series A Preferred Stock

The Series A Preferred Stock as discussed in “ Note 9.

Series A Preferred Stock ” provided us an additional $115.0 million in liquidity during the three months ended September 30, 2022, which we intend to use for (a) for general corporate purposes and (b) for transaction-related fees and expenses.

As of September 30, 2022, the Series A Preferred Stock Issuance Costs totaled $4.5 million.

The holders of Series A Convertible Preferred Stock are entitled to dividends (i) at the rate of 4.5% per annum until but excluding the seven year anniversary of the closing, and (ii) at the rate of 7.0% per annum on and after the seven year anniversary of the closing, and are also entitled to fully participate in any dividends or other distributions declared or paid on our common stock on an as-converted basis.

Dividends will be payable quarterly in arrears, and may be paid, at our option, in cash or by paying dividends in kind .

Our ability to pay cash dividends is subject to the restrictions under the Credit Facility (as defined below).

The Series A Preferred Stock had accrued unpaid dividends of $0.5 million as of September 30, 2022.

The Series A Preferred Stock will rank senior to our common stock with respect to distribution rights and rights upon our liquidation, dissolution or winding up (“Liquidation”), on parity with any class or series of our capital stock expressly designated as ranking on parity with the Series A Preferred Stock with respect to distribution rights and rights upon Liquidation, junior to any class or series of our capital stock expressly designated as ranking senior to the Series A Preferred Stock with respect to distribution rights and rights upon Liquidation and junior in right of payment to our existing and future indebtedness, including the Credit Facility.

Credit Facility

On August 6, 2019, we 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 $60 million, 5 year, revolving credit facility (the “Revolver”) that was fully available as of June 30, 2022.

On November 26, 2019, 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 million (the “2019 Incremental Term Loan”) which is in addition to the existing $350 million term loans outstanding under the Credit Facility and the $60 million Revolver under the Credit Facility.

2 unchanged sentences

The Credit Facility contains certain non-financial restrictive covenants that limit our ability to transfer or dispose of assets, merge with other companies or consummate certain changes of control, acquire other companies, pay dividends, incur additional indebtedness and liens, effect changes in management and enter into new businesses.

As of June 30, 2022 we were in compliance with all covenants under the Credit Facility.

As of September 30, 2022 we were in compliance with all covenants under the Credit Facility.

See “ Note 6.

Debt—Credit Facility ” for more information regarding our Credit Facility and outstanding debt as of June 30, 2022.

Debt—Credit Facility ” for more information regarding our Credit Facility and outstanding debt as of September 30, 2022.

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.

3 unchanged sentences

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 June 30, 2022, the fair value of the interest rate swap was a $26.0 million asset.

The increase in the fair

value of the interest rate swap assets during the six months ended June 30, 2022 is the result of an increase in short term interest rates compared to December 31, 2021.

At September 30, 2022, the fair value of the interest rate swap was a $43.9 million asset.

The increase in

the fair value of the interest rate swap assets during the nine months ended September 30, 2022 is the result of an increase in interest rates compared to December 31, 2021.

On October 21, 2022 we filed a resale registration statement on Form S-3 (File No.

333-267973), on behalf of Ulysses Aggregator, LP (the “Purchaser”) and pursuant to the Registration Rights Agreement between us and the Purchaser, which became effective on November 1, 2022 and covers (i) the issued Series A Preferred Stock and (ii) the number of shares of the Company’s common stock issuable upon conversion of such Series A Preferred Stock, which amount includes and assumes that dividends on the Series A Preferred Stock are paid by increasing the Liquidation Preference of the Series A Preferred Stock for a period of sixteen dividend payment periods from the initial issuance date.

On August 10, 2020, we filed a registration statement on Form S-3 (File No.

2 unchanged sentences

The following table summarizes our cash flows for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

(dollars in thousands)

2 unchanged sentences

Net cash used in investing activities (63,074) (93,382)

Net cash used in financing activities (6,608) (3,381)

Net cash provided by (used in) financing activities 97,127 (5,096)

Effect of exchange rate fluctuations on cash (5,629) (613)

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The volume of professional services rendered, the volume and timing of customer bookings and contract renewals, and the related timing of collections on those bookings and renewals, as well as the timing of spending commitments and payments of our accounts payable, accrued expenses, accrued payroll and related benefits, all affect these account balances.

Cash provided by operating activities was $22.3 million for the six months ended June 30, 2022 compared to cash provided by operating activities of $23.3 million for the six months ended June 30, 2021, a decrease of $1.0 million.

Working capital sources of cash for the six months ended June 30, 2022 included a $22.1 million decrease in accounts receivable related to the timing of collections.

Working capital uses of cash for the six months ended June 30, 2022 included a decrease of $0.9 million in accounts payable related to timing of payments, a decrease of $9.2 million in deferred revenue, a $4.6 million increase in prepaid expenses and other current assets and a $5.2 million decrease in accrued expenses.

Cash provided by operating activities was $24.1 million for the nine months ended September 30, 2022 compared to cash provided by operating activities of $28.6 million for the nine months ended September 30, 2021, a decrease of $4.5 million.

Working capital sources of cash for the nine months ended September 30, 2022 included a $18.2 million decrease in accounts receivable related to the timing of collections.

Working capital uses of cash for the nine months ended September 30, 2022 included a decrease of $1.5 million in accounts payable related to timing of payments, a decrease of $13.3 million in deferred revenue, a $5.1 million increase in prepaid expenses and other current assets and a $11.3 million decrease in accrued expenses.

A substantial source of cash is invoicing for subscriptions and support fees in advance, which is recorded as deferred revenue, and is included on our condensed consolidated balance sheets as a liability.

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As our business grows, we expect our primary investing activities to continue to further expand our library of cloud-based software applications and infrastructure and support additional personnel.

For the six months ended June 30, 2022, cash used in investing activities consisted of $62.4 million associated with the Company’s 2022 acquisitions, and the purchases of property and equipment of $0.3 million.

Cash used in investing activities decreased $30.3 million for the six months ended June 30, 2022 compared to the same period in 2021 primarily as a result of the two acquisitions closed during the period compared to the three acquisitions in the comparable prior year period.

For the nine months ended September 30, 2022, cash used in investing activities consisted of $62.4 million associated with the Company’s 2022 acquisitions, and the purchases of property and equipment of $0.7 million.

Cash used in investing activities decreased $30.3 million for the nine months ended September 30, 2022 compared to the same period in 2021 primarily as a result of the two acquisitions closed during the period compared to the three acquisitions in the comparable prior year period.

Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced applications and professional service offerings, and acquisitions of complementary technologies, products and businesses.

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Our primary financing activities have consisted of capital raised to fund our acquisitions, proceeds from debt obligations incurred to finance our acquisitions, repayments of our debt obligations, and share based employee payroll tax payment activity.

Cash used in financing activities increased $3.2 million for the six months ended June 30, 2022 compared to the same period in 2021.

The increase in cash used in financing activities relates primarily to a $2.3 million increase in additional consideration paid to sellers (i.e.

Cash provided by financing activities increased $102.2 million for the nine months ended September 30, 2022 compared to the same period in 2021.

The increase in cash provided by financing activities relates primarily to $110.5 million in cash proceeds related to our Series A Preferred Stock, net of issuance costs, partially offset by a $7.4 million increase in additional consideration paid to sellers (i.e.

holdbacks) and a $0.8 million increase in net share employee payroll tax settlement payments compared to the same period in 2021.

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Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets.

We are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of August 9, 2022, the date of issuance of this Quarterly Report on Form 10-Q.

We are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of November 3, 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.

1 unchanged sentence

Other Key Accounting Policies

Our unaudited interim financial statements and other financial information for the three and six months ended June 30, 2022, as presented herein and in “ Item 1.

Financial Statements ” to this Quarterly Report on Form 10-Q, reflect no material changes in our critical accounting policies and estimates as set forth in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 24, 2022 (the “Annual Report”).

Our unaudited interim financial statements and other financial information for the three and nine months ended September 30, 2022, as presented herein and in “ Item 1.

December 31, 2021 filed with the SEC on February 24, 2022 (the “Annual Report”).

Please refer to our Annual Report for a detailed description of our critical accounting policies that involve significant management judgment.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis