Upland Software, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to historical information, this Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements may be identified by the use of forward-looking words such as “anticipate,” “believe,” “may,” “will,” “continue,” “seek,” “estimate,” “intend,” “hope,” “predict,” “could,” “should,” “would,” “project,” “plan,” “expect” or the negative or plural of these words or similar expressions, although not all forward-looking statements contain these words. You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. Overview Upland Software, Inc. provides an intelligence layer that unifies and contextualizes enterprise knowledge, content, and data, turning isolated information into actionable outcomes for every human and agent. More than 1,100 enterprise customers rely on Upland's deep domain expertise to drive measurable, value-add outcomes, unlocking the full potential of AI as their organizations evolve. On June 3, 2026, we filed a Certificate of Amendment to our charter with the Secretary of State of the State of Delaware, which effected a 1-for-10 reverse stock split of our issued and outstanding common stock (the "Reverse Stock Split"). As a result of the Reverse Stock Split, every ten shares of our issued and outstanding common stock were automatically combined into one share of common stock, without any change in par value per share, which remained $0.0001 per share. The Reverse Stock Split did not alter any stockholder’s percentage ownership interest in the Company, except to the extent that the Reverse Stock Split resulted in fractional shares. No fractional shares were issued in connection with the Reverse Stock Split, and stockholders who would otherwise have been entitled to receive a fractional share received a cash payment in lieu thereof. All outstanding stock options, restricted stock units, and other equity-based awards, as well as the number of shares available for issuance under our 2024 Omnibus Incentive Plan, as amended, were proportionately adjusted in accordance with their respective terms. Key Metrics and Non-GAAP Financial Measures In addition to the GAAP financial measures described below in “Results of Operations,” we regularly review the following key metrics and non-GAAP financial measures to evaluate and identify trends in our business, measure our performance, prepare financial projections and make strategic decisions. Core Organic Growth Rate We use Core Organic Growth Rate as a key performance measure to assess our consolidated operating performance over time and for planning and forecasting purposes. Core Organic Growth Rate is the percentage change between two reported periods in subscription and support revenue, excluding subscription and support revenue from Sunset Assets, subscription and support revenue from divestitures, and Overage Charges, each as defined below. We calculate our year-over-year Core Organic Growth Rate as though all acquisitions or dispositions closed as of the end of the latest period were closed as of the first day of the prior year period presented. Core Organic Growth Rate does not represent actual organic revenue generated by our business as it stood at the beginning of the respective period. For the three-month period ended June 30, 2026, our Core Organic Growth Rate was negative 0.39%. 20 Table of Contents Core Organic Growth Rates are not necessarily indicative of either future results of operations or actual results that might have been achieved had certain Sunset Asset classifications not been made or had certain acquisitions or dispositions been consummated on the first day of the prior year period presented. We believe that this metric is useful to management and investors in analyzing our financial and operational performance period-over-period along with evaluating the growth of our business normalized for the impact of acquisitions and dispositions, as well as adjusting for the exclusion of non-core Sunset Assets and non-committed Overage Charges. Related Defined Terms In connection with periodic reviews of our business, we have decided to discontinue the availability of certain non-strategic product offerings and a limited number of non-strategic customer contracts (collectively referred to as “Sunset Assets”). It is possible that during future periodic reviews of our business we may determine to add additional non-strategic product offerings or non-strategic customer contracts to Sunset Assets or remove certain product offerings or customer contracts from the classification of Sunset Assets. In either case, we will adjust the revenues attributable to Sunset Assets and properly reflect the year over year change for such addition or removal. Overage Charges are subscription and support revenues earned in addition to contractual minimum customer commitments as a result of the usage volume of services including text and e-mail messaging and third-party pass-through costs that exceed the levels stipulated in contracts with the Company. The following table represents a reconciliation of total revenue, the most comparable GAAP measure, to core organic revenue for each of the periods indicated. Three Months Ended June 30, 2026 2025 (dollars in thousands) Reconciliation of total revenue to core organic revenue: Total revenue $ 49,141 $ 53,383 Less: Perpetual license revenue 1,738 1,199 Professional services revenue 1,251 1,717 Subscription and support revenue from Sunset Assets 1,764 3,336 Subscription and support revenue from divestitures — 2,170 Overage Charges 173 572 Core organic revenue $ 44,215 $ 44,389 Adjusted EBITDA We monitor our Adjusted EBITDA to help us evaluate the effectiveness and efficiency of our operations. Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss), calculated in accordance with GAAP, adjusted for depreciation and amortization expense, net interest expense, loss on debt extinguishment, net other expense (income), benefit from (provision for) income taxes, stock-based compensation expense, acquisition and divestiture related expense, purchase accounting deferred revenue discount, gains and losses on divestitures of businesses, and impairment charges. 21 Table of Contents 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, 2026 2025 2026 2025 (dollars in thousands) Reconciliation of Net Loss to Adjusted EBITDA: Net loss $ (35,318) $ (13,029) $ (36,548) $ (38,877) Add: Depreciation and amortization expense 6,430 8,155 13,054 17,816 Interest expense (income), net 4,526 4,136 8,985 6,579 Other expense (income), net 257 1,595 1,091 1,836 Provision for (benefit from) income taxes 841 (171) 1,827 (1,516) Stock-based compensation expense 830 3,074 1,791 5,749 Divestiture-related expenses — 6,879 22 8,624 Non-recurring litigation costs — 12 1 30 Purchase accounting deferred revenue discount 8 31 21 66 Loss on divestitures of businesses — 434 — 23,891 Impairment of goodwill and other intangibles 35,246 2,469 35,246 2,469 Adjusted EBITDA $ 12,820 $ 13,585 $ 25,490 $ 26,667 We believe that Adjusted EBITDA provides useful information to management, investors and others in understanding and evaluating our operating results for the following reasons: • Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired; • Our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, in the preparation of our annual operating budget, as a measure of our operating performance, to assess the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance because Adjusted EBITDA eliminates the impact of items that we do not consider indicative of our core operating performance; • Adjusted EBITDA provides more consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our operations and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. Adjusted EBITDA should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP. The use of Adjusted EBITDA as an analytical tool has limitations such as: • Impairment of goodwill and other intangibles and depreciation and amortization are non-cash charges, and the assets being depreciated or amortized, which contribute to the generation of revenue, will often have to be replaced in the future and Adjusted EBITDA does not reflect cash requirements for such replacements; however, much of the depreciation and amortization relates to amortization of acquired intangible assets as well as the goodwill as a result of business combination purchase accounting adjustments, which will not need to be replaced in the future; • Adjusted EBITDA may not reflect changes in, or cash requirements for, our working capital needs or contractual commitments; • Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation; • Adjusted EBITDA does not reflect interest or tax payments that could reduce cash available for use; and • Other companies, including companies in our industry, might calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as comparative measures. Because of these limitations, you should consider Adjusted EBITDA together with other financial performance measures, including various cash flow metrics, net loss, and our other GAAP results. 22 Table of Contents Results of Operations Consolidated Statements of Operations Data The following table set forth our results of operations for the specified periods, as well as our results of operations for the specified periods as a percentage of revenue. 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, 2026 2025 2026 2025 Amount Percent of Revenue Amount Percent of Revenue Amount Percent of Revenue Amount Percent of Revenue (dollars in thousands, except share and per share data) Revenue: Subscription and support $ 46,152 94 % $ 50,467 95 % $ 92,243 94 % $ 110,649 95 % Perpetual license 1,738 4 % 1,199 2 % 3,033 3 % 2,807 2 % Total product revenue 47,890 98 % 51,666 97 % 95,276 97 % 113,456 97 % Professional services 1,251 2 % 1,717 3 % 2,555 3 % 3,582 3 % Total revenue 49,141 100 % 53,383 100 % 97,831 100 % 117,038 100 % Cost of revenue: Subscription and support (1)(2) 10,871 22 % 12,412 23 % 21,983 22 % 29,362 25 % Professional services and other (1) 799 2 % 1,023 2 % 1,621 2 % 2,121 2 % Total cost of revenue 11,670 24 % 13,435 25 % 23,604 24 % 31,483 27 % Gross profit 37,471 76 % 39,948 75 % 74,227 76 % 85,555 73 % Operating expenses: Sales and marketing (1) 9,509 19 % 10,771 20 % 18,981 19 % 24,527 21 % Research and development (1) 7,766 15 % 9,781 18 % 15,810 16 % 21,323 18 % General and administrative (1) 9,065 18 % 10,219 19 % 17,603 18 % 21,840 19 % Depreciation and amortization 5,579 11 % 6,864 13 % 11,210 11 % 14,859 13 % Divestiture-related expenses — 2 % 6,879 13 % 22 1 % 8,624 7 % Impairment of goodwill and other intangibles 35,246 72 % 2,469 5 % 35,246 36 % 2,469 2 % Total operating expenses 67,165 137 % 46,983 88 % 98,872 101 % 93,642 80 % Loss from operations (29,694) (61) % (7,035) (13) % (24,645) (25) % (8,087) (7) % Other expense: Interest expense, net (4,526) (9) % (4,136) (8) % (8,985) (9) % (6,579) (6) % Loss on divestitures of businesses — — % (434) (1) % — — % (23,891) (20) % Other income (expense), net (257) (1) % (1,595) (3) % (1,091) (1) % (1,836) (2) % Total other expense (4,783) (10) % (6,165) (12) % (10,076) (10) % (32,306) (28) % Loss before benefit from (provision for) income taxes (34,477) (71) % (13,200) (25) % (34,721) (35) % (40,393) (35) % Benefit from (provision for) income taxes (841) (1) % 171 1 % (1,827) (2) % 1,516 2 % Net loss $ (35,318) (72) % $ (13,029) (24) % $ (36,548) (37) % $ (38,877) (33) % Preferred stock dividends and accretion (1,521) (3) % (1,454) (3) % (3,024) (3) % (2,892) (2) % Net loss attributable to common shareholders $ (36,839) (75) % $ (14,483) (27) % $ (39,572) (40) % $ (41,769) (36) % Net loss per common share: Net loss per common share, basic and diluted $ (12.53) $ (5.08) $ (13.52) $ (14.72) Weighted-average common shares outstanding, basic and diluted 2,939,547 2,851,884 2,927,789 2,837,071 (1) Includes stock-based compensation detailed under Share-based Compensation in “ Item 1. Financial Statements—Note 10. Stockholders' Deficit” . (2) Includes amortization as detailed below. 23 Table of Contents Comparison of the Three and Six Months Ended June 30, 2026 and 2025 See Note 12. Divestitures regarding product lines divested in the three and six months ended June 30, 2025. Revenue Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change (dollars in thousands) Revenue: Subscription and support $ 46,152 $ 50,467 (9) % $ 92,243 $ 110,649 (17) % Perpetual license 1,738 1,199 45 % 3,033 2,807 8 % Total product revenue 47,890 51,666 (7) % 95,276 113,456 (16) % Professional services 1,251 1,717 (27) % 2,555 3,582 (29) % Total revenue $ 49,141 $ 53,383 (8) % $ 97,831 $ 117,038 (16) % For the Three Months Ended June 30, 2026 Total revenue was $49.1 million in the three months ended June 30, 2026, compared to $53.4 million in the three months ended June 30, 2025, a decrease of $4.3 million, or 8%. This decrease is primarily due to the expected declines in revenue related to divested product lines of $3.8 million and Sunset Assets of $0.5 million. An increase in perpetual license revenue of $0.5 million related to core products was offset by a decrease in professional services revenue of $0.4 million in core products and a decrease in subscription and support revenue of $0.1 million related to core products. For the Six Months Ended June 30, 2026 Total revenue was $97.8 million in the six months ended June 30, 2026, compared to $117.0 million in the six months ended June 30, 2025, a decrease of $19.2 million, or 16%. This decrease is primarily due to the expected declines in revenue related to divested product lines of $17.8 million and related to Sunset Assets of $0.9 million. The remaining decrease results from declines in professional services revenue of $0.7 million related to core products offset by an increase in perpetual license revenue of $0.2 million from core products. Cost of Revenue Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change (dollars in thousands) Cost of revenue: Subscription and support (1) $ 10,871 $ 12,412 (12) % $ 21,983 $ 29,362 (25) % Professional services and other 799 1,023 (22) % 1,621 2,121 (24) % Total cost of revenue 11,670 13,435 (13) % 23,604 31,483 (25) % Gross profit $ 37,471 $ 39,948 (6) % $ 74,227 $ 85,555 (13) % (1) Includes amortization and stock-based compensation expense as follows: Amortization $ 851 $ 1,291 $ 1,844 $ 2,957 Stock-based compensation $ 72 $ 143 $ 158 $ 264 For the Three Months Ended June 30, 2026 Cost of subscription and support revenue was $10.9 million in the three months ended June 30, 2026, compared to $12.4 million in the three months ended June 30, 2025, a decrease of $1.5 million, or 12%. The decrease related to divested product lines was $1.5 million attributable to infrastructure costs, variable telecom carrier costs, personnel costs and non-cash amortization of divested intangibles. The decrease related to Sunset Assets was $0.2 million, primarily attributable to personnel-related costs. A decrease of $0.3 million in non-cash amortization of intangibles in our core product lines was offset by a $0.5 million increase in infrastructure costs. Cost of professional services and other revenue was $0.8 million in the three months ended June 30, 2026, compared to $1.0 million in the three months ended June 30, 2025, a decrease of $0.2 million, or 22%. The decrease in cost of professional services and other revenue was comprised of a decrease of $0.2 million in our core product lines due to lower professional services revenue in our core products. 24 Table of Contents For the Six Months Ended June 30, 2026 Cost of subscription and support revenue was $22.0 million in the six months ended June 30, 2026, compared to $29.4 million in the six months ended June 30, 2025, a decrease of $7.4 million, or 25%. The decrease related to divested product lines was $7.3 million attributable to infrastructure costs, variable telecom carrier costs, personnel costs and non-cash amortization of divested intangibles. The decrease related to Sunset Assets was $0.3 million partially offset by $0.2 million increase in our core product lines due to $0.8 million in infrastructure costs, $0.1 million in professional fees, and $0.1 million in variable telecommunications costs offset by a $0.7 million in non-cash amortization of intangibles and $0.1 million infrastructure costs. Cost of professional services and other revenue was $1.6 million in the six months ended June 30, 2026, compared to $2.1 million in the six months ended June 30, 2025, a decrease of $0.5 million, or 24%. The decrease in cost of professional services and other revenue was comprised of a decrease in personnel-related expenses of $0.4 million in our core product lines and $0.1 million in our divested product lines. Operating Expenses Sales and Marketing Expense Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change (dollars in thousands) Sales and marketing (1) $ 9,509 $ 10,771 (12) % $ 18,981 $ 24,527 (23) % (1) Includes stock-based compensation expense as follows: Stock-based compensation $ 13 $ 52 $ 43 $ 304 For the Three Months Ended June 30, 2026 Sales and marketing expense was $9.5 million in the three months ended June 30, 2026, compared to $10.8 million in the three months ended June 30, 2025, a decrease of $1.3 million, or 12%. The decrease related to core product lines was $0.7 million in personnel-related costs. The remaining decrease was due to declines in personnel-related costs of $0.5 million related to divested product lines and $0.1 million related to our Sunset Assets. For the Six Months Ended June 30, 2026 Sales and marketing expense was $19.0 million in the six months ended June 30, 2026, compared to $24.5 million in the six months ended June 30, 2025, a decrease of $5.5 million, or 23%. The decrease related to divested product lines was $3.4 million comprised of $3.2 million in personnel-related costs and $0.2 million in marketing spend and other sales costs. The remaining decrease was primarily related to a decrease of $2.0 million in costs related to our core product lines comprised of $1.8 million in personnel-related costs and $0.2 million infrastructure costs, as well as a $0.1 million decrease in personnel-related costs associated with Sunset Assets. Research and Development Expense Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change (dollars in thousands) Research and development (1) $ 7,766 $ 9,781 (21) % $ 15,810 $ 21,323 (26) % (1) Includes stock-based compensation expense as follows: Stock-based compensation $ 57 $ 318 $ 140 $ 608 For the Three Months Ended June 30, 2026 Research and development expense was $7.8 million in the three months ended June 30, 2026, compared to $9.8 million in the three months ended June 30, 2025, a decrease of $2.0 million, or 21%. The decrease in research and development expense was primarily attributable to a $1.5 million decrease in personnel-related and contractor costs in our core product lines and a $0.5 million decrease in personnel-related costs in our divested product lines. The decrease in research and development expense in our core product lines reflects the 2025 termination of our out-sourced research and development contract and the continued use of our India Center of Excellence. 25 Table of Contents For the Six Months Ended June 30, 2026 Research and development expense was $15.8 million in the six months ended June 30, 2026, compared to $21.3 million in the six months ended June 30, 2025 a decrease of $5.5 million, or 26%. The decrease in research and development expense was primarily attributable to a $2.9 million decrease in personnel-related costs in our core product lines and a $2.5 million decrease in personnel-related costs and $0.1 million decrease in infrastructure costs in our divested product lines. These decreases reflect the termination of our out-sourced research and development contract and the continued use of our efficient India Center of Excellence. General and Administrative Expense Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change (dollars in thousands) General and administrative (1) $ 9,065 $ 10,219 (11) % $ 17,603 $ 21,840 (19) % (1) Includes stock-based compensation expense as follows: Stock-based compensation $ 688 $ 2,561 $ 1,450 $ 4,573 For the Three Months Ended June 30, 2026 General and administrative expense was $9.1 million in the three months ended June 30, 2026, compared to $10.2 million in the three months ended June 30, 2025, a decrease of $1.1 million, or 11%. This decrease was primarily due to a decrease of $1.9 million in personnel-related costs related to our core product lines due to decreased headcount including a decrease of $1.9 million in non-cash stock-based compensation expense and $0.1 million in third party software and equipment costs. This decrease was partially offset by the effects of $0.6 million in TSA fees related to divestitures received in 2025 with no such fees received in 2026, an increase of $0.1 million in board of director fees, an increase of $0.1 million of other taxes and an increase of $0.1 million of public company costs. For the Six Months Ended June 30, 2026 General and administrative expense was $17.6 million in the six months ended June 30, 2026, compared to $21.8 million in the six months ended June 30, 2025, a decrease of $4.2 million, or 19%. This decrease was due to declines of $4.4 million in personnel-related costs, $0.3 million in infrastructure costs, and $0.2 million in professional fees related to our core products, and a $0.3 million decrease related to our divested product lines. These decreases were offset by the effects of $0.7 million in TSA fees related to divestitures received in 2025 with no such fees received in 2026, an increase of $0.2 million in other taxes and public company costs, and an increase of $0.1 million in board of director fees. Depreciation and Amortization Expense Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change (dollars in thousands) Depreciation and amortization: Depreciation $ 203 $ 263 (23) % $ 416 $ 524 (21) % Amortization 5,376 6,601 (19) % 10,794 14,335 (25) % Total depreciation and amortization $ 5,579 $ 6,864 (19) % $ 11,210 $ 14,859 (25) % For the Three Months Ended June 30, 2026 Depreciation and amortization expense was $5.6 million in the three months ended June 30, 2026, compared to $6.9 million in the three months ended June 30, 2025, a decrease of $1.3 million, or 19%. The decrease was primarily driven by lower amortization expense of $0.7 million related to intangible assets associated with Sunset Assets, $0.5 million related to intangible assets associated with our divested product lines, and $0.1 million decline related to intangible assets associated with our core product line. For the Six Months Ended June 30, 2026 Depreciation and amortization expense was $11.2 million in the six months ended June 30, 2026, compared to $14.9 million in the six months ended June 30, 2025, a decrease of $3.7 million, or 25%. The decrease was primarily driven by lower amortization expense of $2.2 million related to intangible assets associated with the divested product lines and $1.4 million related to our Sunset Assets. The remaining decrease of $0.1 million related to depreciation of our core product lines. 26 Table of Contents Divestiture-related Expenses Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change (dollars in thousands) Divestiture-related expenses $ — $ 6,879 (100) % $ 22 $ 8,624 (100) % For the Three Months Ended June 30, 2026 Divestiture-related expenses were nil in the three months ended June 30, 2026, compared to $6.9 million in the three months ended June 30, 2025. In conjunction with the divestitures completed in the first half of 2025, we incurred $5.2 million in fees related to a legacy vendor contract for out-sourced research and development that was terminated in 2025. Also, the divestiture-related expenses incurred in the three months ended June 30, 2025 consisted of $0.9 million in professional services fees and $0.8 million in severance costs related to the divestitures completed in the three months ended June 30, 2025. No divestiture-related expenses were incurred in the three months ended June 30, 2026 as no divestitures have been executed in 2026. For the Six Months Ended June 30, 2026 Divestiture-related expenses were nominal in the six months ended June 30, 2026, compared to $8.6 million in the six months ended June 30, 2025. In conjunction with the divestitures completed in the first half of 2025, we incurred $5.2 million in fees related to a legacy vendor contract for out-sourced research and development that was terminated in 2025. Also, the divestiture-related expenses incurred in the six months ended June 30, 2025 consisted of $2.6 million in professional services fees and $0.8 million in severance costs related to the divestitures completed in the six months ended June 30, 2025. Limited divestiture-related expenses were incurred in the six months ended June 30, 2026 as final expenses were incurred related to the 2025 divestitures and no divestitures have been executed in 2026. Impairment of goodwill and other intangibles Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change (dollars in thousands) Impairment of goodwill and other intangibles $ 35,246 $ 2,469 1,328 % $ 35,246 $ 2,469 1,328 % Goodwill impairment is recognized on a non-recurring basis when the carrying value (or GAAP basis book value) of our Company (which is our only reporting unit) exceeds the estimated fair value of our Company as determined by reference to a number of factors and assumptions. We assess goodwill for impairment annually on October 1st, or more frequently when an event occurs which could cause the carrying value of our Company to exceed the estimated fair value of our Company. As a result of a decline in our stock price and other indicators of impairment during the three months ended June 30, 2026, we performed a goodwill impairment evaluation which resulted in a goodwill impairment charge of $35.2 million in the three months ended June 30, 2026. No goodwill impairment was identified in the three or six months ended June 30, 2025. We will continue to evaluate goodwill for impairment and future impairments of goodwill could occur if we experience significant stock price declines or other indicators of impairment. We periodically review the estimated useful lives of our identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value or revised useful life. During the three months ended June 30, 2026, there were no impairments of identifiable intangible assets. During the three months ended June 30, 2025, we identified a triggering event related to certain identifiable intangible assets related to Sunset Assets and performed a valuation of those long-lived assets. As a result of the valuation, we recorded $2.5 million of impairment expense related to certain identifiable intangible assets associated with Sunset Assets. 27 Table of Contents Other Expense Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change (dollars in thousands) Other expense: Interest expense, net $ (4,526) $ (4,136) 9 % $ (8,985) $ (6,579) 37 % Loss on divestitures of businesses — (434) (100) % — $ (23,891) (100) % Other income (expense), net (257) (1,595) (84) % (1,091) (1,836) (41) % Total other expense $ (4,783) $ (6,165) (22) % $ (10,076) $ (32,306) (69) % For the Three Months Ended June 30, 2026 Interest expense, net was $4.5 million in the three months ended June 30, 2026 compared to $4.1 million in the three months ended June 30, 2025, an increase of $0.4 million in net interest expense. This was primarily due to the effects of our interest rate derivatives which reduced interest expense by $1.1 million in the three months ended June 30, 2026 and by $1.5 million in the three months ended June 30, 2025, resulting in a $0.4 million year over year increase in interest expense recognized. In addition, interest income for the three months ended June 30, 2026 increased $0.1 million from interest income in the three months ended June 30, 2025 due to interest income recognized on seller note in the three months ended June 30, 2026 that did not exist in the three months ended June 30, 2025. This was offset by an increase of $0.3 million in interest expense on our outstanding debt, driven by higher effective interest rates during the quarter, partially offset by lower debt balance in 2026, as well as a $0.2 million reduction in interest expense related to the amortization of deferred financing costs. No divestitures occurred in the three months ended June 30, 2026. In the three months ended June 30, 2025, we finalized the divestitures of certain product lines in order to focus on our higher margin and higher growth potential product lines. Other income (expense), net recognized during the three months ended June 30, 2026 and 2025 was related primarily to foreign currency exchange fluctuations. For the Six Months Ended June 30, 2026 Interest expense, net was $9.0 million in the six months ended June 30, 2026, compared to $6.6 million in the six months ended June 30, 2025, an increase in net interest expense of $2.4 million, or 37%. The increase in interest expense is primarily attributable to the effects of our interest rate derivatives which reduced interest expense, net by $2.4 million in the six months ended June 30, 2026 and decreased interest expense by $4.9 million in the six months ended June 30, 2025, an increase in net interest expense of $2.5 million. This was offset by an increase of $0.3 million in interest expense, driven by higher all-in interest rate on our outstanding debt, partially offset by lower debt balance in 2026, as well as a $0.4 million reduction in interest expense relate to the amortization of deferred financing costs. Loss on divestitures of businesses was nil for the six months ended June 30, 2026 as compared to $23.9 million in the six months ended June 30, 2025. During the six months ended June 30, 2025., we divested multiple product lines in order to focus on our higher margin and higher growth potential product lines. No such divestitures occurred in the six months ended June 30, 2026. Other expense, net was $1.1 million in the six months ended June 30, 2026, compared to other expense, net of $1.8 million in the six months ended June 30, 2025. Other income (expense), net recognized in the six months ended June 30, 2026 and June 30, 2025 related primarily to foreign currency exchange fluctuations. 28 Table of Contents Expense from Income Taxes Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change (dollars in thousands) Benefit from (provision for) income taxes $ (841) $ 171 (592) % $ (1,827) $ 1,516 (221) % For the Three Months Ended June 30, 2026 The provision for income taxes was $0.8 million in the three months ended June 30, 2026, compared to a benefit from income taxes of $0.2 million in the three months ended June 30, 2025, resulting in an additional expense from income taxes of $1.0 million. The provision for income taxes for the three months ended June 30, 2026 relates primarily to income tax from non-U.S. operations. The benefit from income taxes in the three months ended June 30, 2025 relates primarily to the deferred tax benefit from the business divestitures in the first quarter of 2025 which was partially offset by the income tax from non-U.S. and U.S. operations. For the Six Months Ended June 30, 2026 The provision for income taxes was $1.8 million in the six months ended June 30, 2026, compared to a benefit from for income taxes of $1.5 million in the six months ended June 30, 2025, an increase of expense of $3.3 million. This increase was primarily due to the deferred tax benefit from the business divestitures in the six months ended June 30, 2025 with no divestitures occurring in 2026. Liquidity and Capital Resources We finance our operations primarily through cash generated from operating activities and borrowings under credit facilities. As of June 30, 2026, we had $31.7 million of cash, cash equivalents and restricted cash and $229.6 million of debt outstanding under our Credit Agreement. As of December 31, 2025, we had $30.0 million of cash, cash equivalents and restricted cash and $238.5 million of borrowings outstanding under our previous senior secured credit facility. The $1.7 million increase in cash, cash equivalents and restricted cash from December 31, 2025 to June 30, 2026 was primarily due to $11.0 million in cash inflows from operations netted with $8.9 million in debt repayments made in the six months ended June 30, 2026. Other uses of cash included $0.2 million in purchases of leasehold improvements and equipment and $0.2 million negative effect of exchange rates during the six months ended June 30, 2026. Our cash and cash equivalents held by our foreign subsidiaries was $9.3 million as of June 30, 2026 and $10.0 million as of December 31, 2025. Our intent is to either permanently reinvest these funds outside the U.S. or use these funds to repay certain long-term intercompany loans. We do not provide for federal income taxes on the undistributed earnings of our foreign subsidiaries. We believe our available cash and cash equivalents, together with our positive cash flows from operations and the liquidity provided by our $30 million revolving credit facility will be sufficient to meet our anticipated cash needs. The following table summarizes our cash flows for the periods indicated: Six Months Ended June 30, 2026 2025 (dollars in thousands) Consolidated Statements of Cash Flows data: Net cash provided by operating activities $ 10,973 $ 11,594 Net cash provided by investing activities 193 8,005 Net cash used in financing activities (9,295) (36,262) Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash (225) 1,248 Change in cash, cash equivalents and restricted cash 1,646 (15,415) Cash, cash equivalents and restricted cash, beginning of period 30,024 57,052 Cash, cash equivalents and restricted cash, end of period $ 31,670 $ 41,637 Cash Flows from Operating Activities Cash provided by operating activities is significantly influenced by the amount of cash we invest in personnel and infrastructure to support the growth of our business. Our working capital consists primarily of cash, receivables from customers, prepaid assets, unbilled professional services, deferred commissions, accounts payable, accrued compensation and other accrued expenses, lease 29 Table of Contents liabilities, and deferred revenues. 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 $11.0 million for the six months ended June 30, 2026 compared to cash provided by operating activities of $11.6 million for the six months ended June 30, 2025, a decrease of approximately $0.6 million. This decrease was primarily due to a reduction in accrued compensation and other accrued expenses offset with reduced accounts receivable. 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. Deferred revenue consists of the unearned portion of booked fees for our software subscriptions and support, which is amortized into revenue in accordance with our revenue recognition policy. We assess our liquidity, in part, through an analysis of new subscriptions invoiced, expected cash receipts on new and existing subscriptions, and our ongoing operating expense requirements. Cash Flows from Investing Activities Historically, our investing activities have consisted of routine purchases of office equipment. Other activities, such as divestitures of businesses including the collections on note receivable from divested product lines, and purchases of other fixed assets, may affect our cash flows from investing activities in such periods as these transactions occur. Cash provided by investing activities was $0.2 million for the six months ended June 30, 2026 compared to cash provided by investing activities of $8.0 million for the six months ended June 30, 2025, a decrease of $7.8 million. Cash activity consisted of $0.4 million in collections on the note receivable related to divestitures and $0.2 million in purchases of leasehold improvements and equipment for the six months ended June 30, 2026 compared to cash proceeds from divestitures of businesses of $9.1 million and $1.1 million in purchases of leasehold improvements and equipment for the six months ended June 30, 2025. Cash Flows from Financing Activities Historically, our primary financing activities have consisted of capital raises, proceeds from debt obligations, repayments and servicing of our debt obligations, share repurchases and share based employee payroll tax payment activity. Cash used in financing activities was $9.3 million for the six months ended June 30, 2026 compared to $36.3 million for the six months ended June 30, 2025, a decrease of $27.0 million of cash used primarily due to $8.9 million in payments on our outstanding debt in the six months ended June 30, 2026 as compared to $35.6 million in payments made in the six months ended June 30, 2025. Critical Accounting Policies and the Use of Estimates We prepare our condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of our condensed consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policy discussed below is critical to understanding our historical and future performance, as this policy relates to a more significant area involving management’s judgments and estimates. Goodwill Impairment We assess goodwill for impairment annually on October 1st, or more frequently when an event occurs which could cause the carrying value of the Company to exceed the estimated fair value of the Company. As we operate as one reporting unit, the goodwill impairment evaluation is performed at the consolidated entity level by comparing the estimated fair value of the Company to its carrying value. We first assess qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying value. Qualitative factors considered include: industry and market considerations; macroeconomic conditions; and other relevant events and factors. Based on the qualitative assessment, if it is determined that it is more likely than not that the Company's fair value is less than its carrying value, then we perform a quantitative analysis using a fair-value-based approach to determine if the fair value of our reporting unit is less than its carrying value. Performing a quantitative goodwill impairment test includes the determination of the fair value of a reporting unit and involves significant estimates and assumptions. These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, weighted average cost of capital, and future economic and market conditions. See Note 4. Goodwill and Other Intangible Assets for more information. 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 14, 2026, the date of issuance of this Quarterly Report on Form 10-Q. 30 Table of Contents Estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. Other Key Accounting Policies Our unaudited interim financial statements and other financial information for the three and six months ended June 30, 2026, 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, 2025 (the “Annual Report”). Please refer to our Annual Report for a detailed description of our critical accounting policies that involve significant management judgment. We evaluate our estimates, judgments and assumptions on an ongoing basis, and while we believe that our estimates, judgments and assumptions are reasonable, they are based upon information available at the time. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions. Recent Accounting Pronouncements For information with respect to recent accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, refer to “Note 2. Basis of Presentation and Summary of Significant Accounting Policies—Recent Accounting Pronouncements” to our condensed consolidated financial statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.