Upland Software, Inc.UPLD

Upland Software, Inc. Goodwill & Intangibles Disclosure

10-KFiled Mar 12, 20253 min read
5. Goodwill and Other Intangible Assets
Changes in the Company’s Goodwill balance for each of the two years in the period ended December 31, 2024 are summarized in the table below (in thousands):
Balance at December 31, 2022$477,043 
Adjustment related to finalization of business combinations415 
Impairment of goodwill
(128,755)
Foreign currency translation adjustment5,075 
Balance at December 31, 2023$353,778 
Impairment of goodwill
(87,227)
Foreign currency translation adjustment(5,575)
Balance at December 31, 2024$260,976 
We review goodwill for impairment annually in the fourth quarter of the fiscal year and whenever events or changes in circumstances indicate that the carrying value of goodwill might not be recoverable.
As a result of the decline of our stock price impacting our market capitalization during the quarters ended March 31, 2024, March 31, 2023 and December 31, 2022, we performed quantitative impairment evaluations, which resulted in goodwill impairments of $87.2 million, $128.8 million and $12.5 million during the quarters ended March 31, 2024, March 31, 2023 and December 31, 2022, respectively. Our quantitative goodwill impairment analysis applied two methodologies to estimate the Company’s fair value which were: a) a discounted cash flow method and b) a guideline public company method. The two methods generated similar results and indicated that the fair value of the Company was less than its carrying value. The discounted cash flow method requires significant judgments, including estimation of future cash flows, which is dependent on internally developed forecasts, estimation of the long-term rate of growth for our business, and determination of our weighted average cost of capital. Under the guideline public company method, we estimate fair value based on a market multiple of revenues and earnings derived for comparable publicly traded companies with similar operating characteristics as the Company.
Intangible assets, net, include the estimated acquisition-date fair values of customer relationships, marketing-related assets and developed technology that the Company recorded as part of its business acquisitions purchases and from acquisitions of customer relationships. The following is a summary of the Company’s Intangible assets, net (in thousands):
Estimated Useful
Life (Years)		Gross
Carrying Amount		Accumulated
Amortization		Net Carrying
Amount
December 31, 2024
Customer relationships
1-10
$348,524 $239,563 $108,961 
Trade name
1.5-10
9,329 7,949 1,380 
Developed technology
4-9
85,558 72,132 13,426 
Favorable leases
6.3
$258 $122 $136 
Total intangible assets$443,669 $319,766 $123,903 
Estimated Useful
Life (Years)		Gross
Carrying Amount		Accumulated
Amortization		Net Carrying
Amount
December 31, 2023
Customer relationships
1-10
$378,923 $222,436 $156,487 
Trade name
1.5-10
10,012 7,862 2,150 
Developed technology
4-9
94,103 70,582 23,521 
Favorable leases6.3280 89 191 
Total intangible assets$483,318 $300,969 $182,349 
The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value or revised useful life.
Total amortization expense was $53.8 million, $70.6 million, and $54.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.
No impairment of intangible assets were recorded during the years ended December 31, 2024, 2023 and 2022.
As of December 31, 2024, the estimated annual amortization expense for the next five years and thereafter is as follows (in thousands):
Year ending December 31:Amortization
Expense
2025$38,002 
202635,877 
202726,999 
202817,620 
20295,405 
Thereafter— 
Total$123,903 

About Goodwill & Intangibles Disclosures

Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.

Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.

Other Available Disclosures

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