Upland Software (UPLD) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Our business strategy includes plans for organic growth, and our financial condition and results of operations could be adversely affected if we fail to grow or fail to manage our growth effectively
2. 02Our growth depends on our ability to retain existing customers and secure additional subscriptions and cross-sell opportunities from existing customers
3. 03We depend on our senior management team and the loss of one or more key personnel, or an inability to attract and retain highly skilled personnel may impair our ability to grow our business
4. 04Because we generally recognize revenue from our customers over the terms of their agreements, downturns or upturns in our business may not be immediately reflected in our operating results
5. 05We face various risks associated with operating as a multinational corporation and our growth and long-term success depends, in part, on our ability to expand our international sales and operations
6. 06Our sales cycles can be lengthy and variable, which may cause changes in our operating results
7. 07In addition, even if the operations of an acquisition are integrated successfully, we may not realize the full benefits of the acquisition, including the synergies, cost savings, or growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all
8. 08Perpetual license revenue is unpredictable, and a material increase or decrease in perpetual license revenue from period to period can produce substantial variation in the total revenue and earnings we recognize in a given period
9. 09Any disruption of service at the data centers that house our equipment and deliver our applications or with our hosting service providers could harm our business
10. 10Actual or perceived security vulnerabilities in our solutions and services or cyberattacks on our networks could have a material adverse impact on our business, results of operations and financial condition
11. 11Our success depends on our ability to adapt to technological change and continue to innovate
12. 12Complex software applications such as ours often contain errors or defects, particularly when first introduced or when new versions or enhancements are released. Our current and future applications may contain serious defects
13. 13Our use of open source software could negatively affect the performance of our applications and our ability to sell our applications and subject us to possible litigation
14. 14Certain of our operating results and financial metrics are difficult to predict as a result of seasonality
15. 15We could incur substantial costs as a result of any claim of infringement of another party’s intellectual property rights
16. 16We could incur substantial costs in protecting our intellectual property from infringement, and any failure to protect our intellectual property could impair our business
17. 17We rely on third-party software that is required for the development and deployment of our applications, which may be difficult to obtain or which could cause errors or failures of our applications

Market Risks

1. 18The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results could be adversely affected
2. 19Our quarterly operating results may fluctuate in the future. As a result, we may fail to meet or exceed the expectations of research analysts or investors, which could cause our stock price to decline, and you may lose part or all of your investment
3. 20Mergers of, or other strategic transactions by, our competitors could weaken our competitive position or reduce our revenue

Financial Risks

1. 21Our loan facility matures in August 2026. We expect to renegotiate or refinance our loan facility, and we may be unable to do so on acceptable terms or at all and any additional financing may result in restrictions on our operations or substantial dilution to our stockholders
2. 22At December 31, 2024, the total outstanding indebtedness under our Credit Facility (as defined herein) was $293.7 million
3. 23Our Credit Facility contains operating and financial covenants that may restrict our business and financing activities
4. 24Fluctuations in the exchange rate of foreign currencies could result in losses on currency transactions
5. 25If we are unable to implement and maintain effective internal controls over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our common stock may be negatively affected
6. 26Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
7. 27In the past we have recorded, and in the future we may be required to record, charges to future earnings if our goodwill or intangible assets become impaired
8. 28We may be adversely affected by the effects of inflation

Legal and Regulatory Risks

1. 29Unanticipated challenges by tax authorities could harm our future results
2. 30Taxing authorities may successfully assert that we should have collected or, in the future, should collect additional sales and use taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our results of operations
3. 31Our operating results could be adversely affected by an increase in our effective tax rate as a result of U.S. and foreign tax law changes, outcomes of current or future tax examinations, or by material differences between our forecasted and actual effective tax rates
4. 32Tax laws, regulations, and compliance practices are evolving and may have a material adverse effect on our results of operations, cash flows and financial position
5. 33Taxing authorities could reallocate our taxable income among our subsidiaries, which could increase our consolidated tax liability
6. 34New laws and increasing levels of regulation in the areas of privacy and protection of user data could harm our business
7. 35We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws

Risks Related to Ownership of Our Common Stock

1. 36If securities or industry analysts do not publish, or cease publishing, research or reports about us, our business or our market, if they publish negative evaluations of our stock, or if we fail to meet the expectations of analysts, the price of our stock and trading volume could decline
2. 37Because we do not expect to pay any dividends on our common stock for the foreseeable future, our investors may never receive a return on their investment
3. 38As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock from engaging in certain business combinations with us
4. 39Pursuant to the terms of the Purchase Agreement (as defined herein), we have issued shares of our Series A Preferred Stock that ranks senior to our common stock in priority of distribution rights and rights upon our liquidation, dissolution or winding up and has additional corporate governance rights
5. 40The fundamental change redemption feature of our Series A Preferred Stock may make it more difficult for a party to take over our company or discourage a party from taking over our company
6. 41We have entered into the 2024 Tax Benefit Preservation Plan, which may not protect the future availability of the Company’s tax assets in all circumstances and which could delay or discourage takeover attempts that some shareholders may consider favorable

General Risks

1. 42An epidemic, pandemic or contagious disease and measures intended to prevent the spread of such an event could adversely affect our business, results of operations and financial condition
2. 43Adverse economic conditions may reduce our customers’ ability to spend money on information technology or software, or our customers may otherwise choose to reduce their spending on information technology or software, which may adversely impact our business
3. 44The market price of our common stock may be volatile, which could result in substantial losses for investors