What changed in this filing

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Item 1. Business

2023-03-01 compared with 2022-02-24 · 53 added, 44 removed, 186 unchanged (34% of the section changed)

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

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 t he customer experience, or CXM, f ocused organizations across a variety of use cases including mobile messaging, mobile ap plication 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.

Our applications deliver value to organizations across a number of use cases including mobile messaging, mobile application marketing, Voice of the Customer (VOC), email marketing, knowledge management and call center productivity.

Sales teams employ our applications to drive growth through deeper customer engagement, reduced sales cycle times, and 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.

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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.

• Knowledge Management.

In addition to contact centers, we provide knowledge management applications to a variety of lines of businesses to improve employee productivity and value by providing more direct access to knowledge.

Upland knowledge solutions provide access to time-critical information from within our applications or other systems that exists within an organization and delivers a unified view of all related content.

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

• Project Management.

Business leader s 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 technology, or IT, new product development, and services departments along with industry depth in higher education, public sector, and healthcare IT.

Business leaders and project management officers (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 project delivery lifecycle.

Our applications deliver value to project management across a variety of use cases including continuous improvement, enterprise 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.

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.

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Upland 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.

In addition, our products help operations team 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.

Human resources (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.

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Our subscription and support revenue increased from $287.6 million to $297.9 million, from the year ended December 31, 2021 compared to the year ended December 31, 2022, representing a 4% period-over-period growth rate.

See “Note 13 Revenue Recognition”, in the notes to the consolidated financial statements for more information regarding our revenue as it relates to domestic and foreign operations.

To support continued growth, we intend to continue to pursue acquisitions within our core cloud offerings of complementary technologies and businesses.

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• High-Touch Customer Success Program.

We have institutionalized a set of unique customer commitments and deliverables we call the Upland Customer Success Program that includes onboarding and training, a dedicated customer success representative, upgraded success plans, quarterly virtual user conferences, periodic executive outreach, and Net Promoter Score, or NPS, surveys, and an ongoing customer feedback loop.

We have institutionalized a set of unique customer commitments and deliverables we call the Upland Customer Success Program that includes onboarding and training, a dedicated customer success representative, upgraded success plans, virtual user conferences, periodic executive outreach, Net Promoter Score (NPS), and an ongoing customer feedback loop.

• Quality-Focused R&D .

Our approach to R&D at Upland is straight-forward:

prioritize customer need, leverage a metrics-driven agile approach with visibility and accountability, and deploy up-to-date development systems to ensure quality is built into every step of development.

Our approach to research and development (R&D) at Upland is straight-forward:

prioritize the customer need, leverage a metrics-driven agile approach with visibility and accountability, and deploy up-to-date development systems and processes to ensure quality and security are built into every step of development.

In 2022, we announced the creation of our own R&D Center of Excellence in India which we are continuing to grow as we expand our cost-effective offshore product development platform in order to maintain our product competitiveness and expand our total addressable market.

• Customer-Driven Innovation.

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Requests from our Premier Success Plan customers are given additional priority weighting for new features and minor issue resolution.

Product feedback outlets include customer success account management, quarterly virtual user conferences, annual customer advisory boards, and Upland’s online communities.

Product feedback outlets include customer success account management, virtual user conferences, customer advisory boards, and Upland’s online communities.

• Expert Professional Services .

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Once we engage on a project, we dedicate a team to the planning, configuration, integration, launch, administration, and maintenance of the application.

• 24x7 Global Support.

• Global Support.

Upland Global support includes:

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unlimited case submissions and real-time case updates;

and full support across the globe .

and technical support access worldwide .

For customers that have more urgent support requirements, Upland Premier Success Plans provide enhanced response times and availability for the most severe support requests.

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Upland’s products run on an enterprise-class cloud environment - delivering power, reliability, and flexibility.

We utili ze Amazon Web Services (“AWS”) and Microsoft Azure (“Azure”) for our cloud-based products and move acquired products to either AWS or Azure in connection with our acquisition integration program.

Upland’s cloud technology gives customers the freedom from legacy applications without having to compromise security or scalability.

Our applications are scalable and can support large deployments while maintaining required performance levels.

We utili ze third-party cloud providers for our cloud-based products and move acquired products to third-party cloud providers in connection with our acquisition integration program.

Our applications are scalable and can support large deployments while maintaining high levels of availability, performance and security levels.

Our operating results in a given period can fluctuate based on the mix of subscription and support, perpetual license and professional services revenue.

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• Diversified family of cloud applications .

We offer a family of cloud-based enterprise work management applications that addresses a broad range of enterprise needs.

We offer a family of cloud-based software applications that addresses a broad range of enterprise needs.

We believe this benefits our customers as compared to many of our cloud-based competitors who offer only a single point solution for a more limited and discrete need.

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We have a dedicated customer success organization whose mission is to drive adoption, value realization, retention, and loyalty across our customer base.

Our focus on enabling our customers’ success is a key reason our annual net dollar retention rate, as defined hereafter in “Item 7.

Management's Discussion and Analysi s—Key Metrics,” was 94% as of December 31, 2021.

Our focus on enabling our customers’ success is a key reason our annual net dollar retention rate was 95% as of December 31, 2022.

See “ Item 7.

Management's Discussion and Analysi s—Key Metrics ,” for our definition of annual net dollar retention rate.

Our commitment to customer success has enabled us to expand our footprint within customer organizations and facilitate the ongoing adoption of our enterprise software applications.

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Our customers operate in a wide variety of industries, including financial services, consulting services, technology, manufacturing, media, telecommunications, government, political, non-profit, healthcare, life sciences, retail and hospitality.

For the year ended December 31, 2021, approximately 90% of our recurring revenue was generated from what we consider to be major accounts, those customers with contracted annual recurring revenue of $25,000 or more.

For the year ended December 31, 2022, approximately 90% of our recurring revenue was generated from what we consider to be major accounts.

We consider customers with contracted annual recurring revenue of $25,000 or more to be “major accounts.”

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

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We employ a land-and-expand go-to-market strategy.

After we demonstrate the value of an initial application to a customer, our sales and account management teams work to expand the adoption of that initial application across the customer, and cross-sell additional applications to address other enterprise work management needs of the customer.

Our customer success organization supports our direct sales efforts by managing the post-sale customer lifecycle.

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We focus a significant portion of our marketing activities on our existing customers to drive expansion and cross-sell opportunities.

Our marketing programs target decision makers and influencers who participate in a buying cycle, including the chief information officer, the chief procurement officer, the chief marketing officer, the chief digital officer, the chief financial officer, the director of process excellence, and other key technology and business managers.

Our principal marketing programs include:

Our marketing programs target decision makers and influencers who participate in the buying cycles of various business functions inside large organizations including marketing, sales, contact centers, knowledge management, project management, information technology, business operations, human resources and legal.

Our lead and demand generation programs include:

▪ use of our website to provide information about us and our software applications, as well as educational opportunities for potential customers;

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▪ our online virtual user conferences;

▪ integrated digital marketing campaigns, including email, online advertising, blogs, and webinars;

▪ integrated digital marketing campaigns, including email, online, blogs, and webinars;

▪ public relations, analyst relations, and social media initiatives;

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▪ Premier success plans that provide a bundled services, support, and product experience offering with two tiers (gold and platinum) designed to provide maximum customer value.

▪ Executive outreach where we promote open communication between the Upland leadership team, which is fully committed to making sure customers are delighted with their Upland experience, and customer executives.

▪ Executive outreach where we promote open communication between the Upland leadership team and our customer’s key stakeholders, which is fully committed to making sure customers are delighted with their Upland experience, and customer executives.

Technology and Operations

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Our applications are easy to deploy, highly configurable, scalable, flexible, and secure, and provide our customers with a modern and intuitive user experience.

We have partnered with AWS and Azure to provide the hardware and infrastructure necessary to provide our services to our customers.

AWS and Azure facilities provide 24/7/365 security, biometric access controls, redundant networking, power and environmental systems, and monitoring.

We have partnered with third-party hosting platforms to provide the hardware and infrastructure necessary to provide our services to our customers.

Third-party hosting platform facilities provide 24/7/365 security, biometric access controls, redundant networking, power and environmental systems, and monitoring.

Upland Software designs and operates the infrastructure architecture with fully redundant subsystems, highly available configurations, and defense in depth security zones.

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We rely on a combination of trademark, copyright, trade secret, and patent laws in the United States and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our intellectual property.

We have historically experienced seasonality in terms of when we enter into customer agreements.

We sign a significantly higher percentage of agreements with new customers, and renew agreements with existing customers, in the fourth quarter of each calendar year, resulting in our cash flow from operations historically being higher in the first quarter of each calendar year than in other quarters.

We expect this seasonality to continue, or possibly increase in the future.

See “ Risk Factors—Risks Related to Our Common Stock—Certain of our operating results and financial metrics are difficult to predict as a result of seasonality .”

We believe that our businesses and operations are in substantial compliance with all applicable government laws and regulations.

Any additional measures to maintain compliance are not expected to materially affect our capital expenditures, competitive position, financial position or results of operations.

Various legislative and administrative regulations applicable to us have become effective or are under consideration in many parts of the world.

To date, such developments have not had a substantial adverse impact on our revenues, earnings or cash flows.

However, if new or amended laws or regulations impose significant operational restrictions and compliance requirements upon us or our business, our capital expenditures, results of operations, financial condition and competitive position could be negatively impact.

Refer to “ Risk Factors ” for further information.

Human Capital

We believe that our ability to attract and retain highly skilled employees is critical to our success.

As of December 31, 2021, we had 865 employees, with the majority of our employees located in the United States, Canada, Ireland and the United Kingdom.

As of December 31, 2022, we had 1,006 full time employees, with the majority of our employees located in the United States, Australia, Canada, India, Ireland, and the United Kingdom.

None of our employees are covered by a collective bargaining agreement.

We have never experienced a strike or similar work stoppage, and we consider our relations with our employees to be good.

Human capital measures and objectives Upland focuses on in managing its business include the following:

Human capital measures and objectives we focus on in managing its business include the following:

• Recognition of Collaborative Problem Solvers.

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• Employee Talent Acquisition and Retention.

Upland has always supported a “work anywhere” philosophy that allows us to recruit and retain top talent throughout the world.

Our team members have the flexibility to work remotely, in an office where available, or a hybrid according to their preferences.

We have always supported a “work anywhere” philosophy that allows us to recruit and retain top talent throughout the world.

Our team members have the flexibility to work remotely, in an office where available, or a hybrid of the two, according to their preferences.

Our total compensation and benefits packages are market competitive.

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• Employee Engagement.

Upland surveys team members twice a year to gather feedback on key factors of employee experience, including work/life blend, social connection and learning and development.

We have a formal Employee Resource Group (“ERG”) program that fosters the formation of and provides support to employee-led groups dedicated to education and building community for team members with a shared characteristic or interest.

We survey team members twice a year to gather feedback on key factors of employee experience, including work/life blend, social connection and learning and development.

We have a formal Employee Resource Group program that fosters the formation of and provides support to employee-led groups dedicated to education and building community for team members with a shared characteristic or interest.

• Development and Promotion of Leaders.

Upland’s high annual growth provides consistent promotion opportunities for our team members.

Our high annual growth provides consistent promotion opportunities for our team members.

We provide career ladders and development resources for all of our key functions.

We provide leadership training for our managers.In addition, team members that join us through regular acquisitions have access to career development and promotion opportunities that would not have been available at their smaller companies.

We are in the process of deploying management training as part of our 2021 Development initiatives.

• Creating a Culture of Customer Value and Improvement.

Delivering customer value is core to the Upland mission.

Our UplandOne operating processes focus on quantifying customer satisfaction through Net Promoter Score (“NPS”) surveys, maintaining customer-driven software roadmaps, and empowering our team members to leverage expert resources from across the company to drive business success for our customers.

We continue to support the health and well-being of our employees, customers, partners and communities during the ongoing global COVID-19 pandemic and during this time of uncertainty.

Prior to the wide-spread implementation of stay-at-home measures, approximately 60 percent of our employee and contractor workforce was already remote.

As such, we are continuing our remote working arrangements and limiting non-essential business travel for our employees.

We are currently evaluating our plans to reopen our facilities and resume business travel for our employees.Our focus remains on the safety and well-being of our employees while maintaining health and safety protocols at each office location.

Delivering customer value is core to our mission.

Our UplandOne operating processes focus on quantifying customer satisfaction through NPS surveys, maintaining customer-driven software roadmaps, and empowering our team members to leverage expert resources from across the company to drive business success for our customers.

Available Information

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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-K

Item 1. Business