Upland Software (NASDAQ:UPLD) reported lower third-quarter revenue and adjusted earnings as customer churn weighed on its core products, prompting the enterprise software company to narrow its full-year outlook while pursuing an AI-focused turnaround.
Revenue for the quarter ended Sept. 30 fell 6% from a year earlier to $47.5 million, though it came in above the midpoint of management’s guidance. Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, declined to $12.6 million from $16 million a year earlier.
CEO Sean Nathaniel said three customer churn events affected the quarter. Some customers facing financial pressure sharply reduced their use of internal applications, while others retired legacy applications as they shifted toward artificial intelligence-driven use cases.
“We grow with them where our AI capabilities fit, but we can lose revenue where legacy applications are retired,” Nathaniel said.
Revenue Declines, but Operating Expenses Fall
Subscription and support revenue declined 5% to $45.3 million, accounting for 95% of total revenue. CFO Jennifer Simon said approximately $600,000 of the $3 million year-over-year revenue decline came from businesses divested in 2025 and products and contracts being wound down. The remaining $2.4 million decline came from core products, which were affected by increased churn.
Upland’s core organic growth rate was negative 3.9%. Simon said the company plans to stop reporting that metric after the third quarter because its divestitures were completed in 2025 and its comparisons will no longer include revenue from divested businesses beginning in the fourth quarter.
Adjusted EBITDA margin was 27%, down from 32% a year earlier but up from 26% in the second quarter. Operating expenses fell 8% to $30.7 million, helping keep operating income essentially unchanged at $5.3 million.
Upland posted a GAAP net loss of $500,000, compared with a loss of $1.1 million a year earlier. After preferred stock dividends, the loss attributable to common shareholders was $2 million, or $0.67 per share. Non-GAAP net income fell to $6.4 million from $10.8 million.
Outlook Reflects Churn
For the fourth quarter, Upland expects revenue of $44.7 million to $47.7 million and adjusted EBITDA of $12.5 million to $14 million. The revenue midpoint represents a 6% decline from the fourth quarter of 2025, Simon said.
For full-year 2026, management expects revenue of $190.1 million to $193.1 million and adjusted EBITDA of $50.5 million to $52 million. Simon said the company narrowed both ranges to account for the revenue impact of churn while maintaining profitability.
Upland expects to provide formal 2027 guidance when it reports fourth-quarter and full-year results in March. Simon said the company’s priorities include stabilizing revenue through better retention and channel partnerships, expanding margins and remaining free cash flow positive.
AI Strategy and Debt Reduction
Nathaniel outlined a three-phase plan that starts with simplifying the portfolio, reducing costs and paying down debt through early 2027. The company then aims to stabilize and expand in 2027, followed by growth from new AI-related use cases in 2028 and beyond.
Upland is targeting an adjusted EBITDA margin of approximately 35% in the first half of 2028. Asked why the company could not reach that level sooner, Simon said it needed to approach cost reductions carefully to avoid jeopardizing the business. Nathaniel did not provide a numerical growth target for 2028.
The CEO said Upland added 77 customers during the quarter, including 10 major customers, and expanded relationships with 185 existing customers. He highlighted a healthcare customer using Upland’s intelligent capture technology to automate the intake, classification and routing of patient documents, as well as a six-figure annual recurring revenue win with a Canadian police force.
Free cash flow was $2.7 million in the quarter, down from $6.7 million a year earlier. Simon said the earlier period benefited from the sale of an interest rate swap. Upland repaid $4.2 million of term-loan principal during the quarter and ended September with $225.4 million outstanding, $28.9 million in unrestricted cash and an undrawn $30 million revolving credit facility.
Nasdaq Compliance Deadline
Simon also addressed Upland’s Nasdaq listing. The company received notice in July that it no longer met the Nasdaq Global Market’s $15 million minimum market value requirement for publicly held shares and has until Jan. 27, 2027, to regain compliance.
Simon said Upland does not expect any change in its listing status to affect its operations or stakeholder relationships.
About Upland Software (NASDAQ:UPLD)
Upland Software, Inc is an enterprise software company that develops cloud-based applications for managing work, customer relationships and business processes. Its software is designed to help organizations automate workflows, organize information, improve collaboration and measure operational performance across departments.
Upland’s product portfolio has included solutions for project and portfolio management, enterprise content management, knowledge management, customer experience, customer service, sales enablement, communications and information technology service management.
