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LivePerson Announces First Quarter 2014 Financial Results

Companies mentioned in this article: LivePerson, Inc.

NEW YORK, May 7, 2014 /PRNewswire/ -- LivePerson, Inc. (NASDAQ: LPSN), a leading provider of digital engagement solutions, today announced financial results for the first quarter ended March 31, 2014.

http://photos.prnewswire.com/prnvar/20110105/NY24753LOGO-a

Revenue

Total revenue, which includes our consumer operations, was $47.8 million for the first quarter. Revenue from business operations (B2B) for the first quarter was $43.9 million. Revenue from consumer operations for the first quarter was $3.9 million.

For the first quarter 2014, B2B revenue, excluding the small business segment, grew 17% over the same period last year.

Bookings for the first quarter of 2014 were $9.0 million, which compares to $7.5 million in the first quarter of 2013. Bookings are measured as incremental new contractual commitments from new or existing customers, excluding non-recurring and usage-based fees.

"Providing a best-in-class digital experience has become a top priority for many of our larger customers," said CEO Robert LoCascio. "During the quarter, we signed the largest new customer deal in LivePerson's history, as well as one of the largest expansions. Our LiveEngage platform is allowing us to strategically align with these great brands and help them build powerful, one-on-one relationships with their customers across all digital touch points."

Customer Expansion

LivePerson signed a total of 109 deals in the quarter, consisting of both new and existing customers, adding 26 new customers during the quarter, including:

    --  One of the largest cable telecommunications companies in the U.S.
    --  A leading international brand of premium travel, business and lifestyle
        accessories
    --  One of the biggest providers of supplemental insurance in the U.S.
    --  One of Australia's largest telecommunications and media companies

The Company also expanded business with:

    --  Two of the largest multinational financial services corporations in
        North America
    --  A leading airline in the U.K.
    --  A leading U.S. retailer of pet specialty products and services

Net Loss

Net loss for the first quarter of 2014 was $0.8 million or $0.01 per share, as compared to net loss of $0.2 million or $0.00 per share in the first quarter of 2013.

Adjusted Net Income and Adjusted EBITDA

Adjusted net income for the first quarter of 2014 was $3.0 million or $0.05 per share, as compared to $3.2 million or $0.06 per share in the first quarter of 2013.

Adjusted EBITDA for the first quarter of 2014 was $4.8 million or $0.09 per share, as compared to $4.9 million or $0.09 per share in the first quarter of 2013.

LivePerson considers adjusted net income and adjusted earnings before other income/(expense), taxes, depreciation, amortization, stock-based compensation and other non-cash charges, if any (adjusted EBITDA) to be important financial indicators of the Company's operational strength and the performance of its business. These results should be considered in addition to results prepared in accordance with generally accepted accounting principles in the United States (GAAP), but should not be considered as a substitute for, or superior to, GAAP results.

The difference between adjusted EBITDA per share, a non-GAAP measure, and GAAP EPS, is other income/(expense), taxes, depreciation, amortization, stock-based compensation and other non-cash charges, if any. The difference between adjusted net income per share and GAAP EPS is amortization of purchased intangible assets and stock-based compensation.

A reconciliation of the differences between adjusted EBITDA and adjusted net income, and the most comparable financial measure calculated and presented in accordance with GAAP, is presented under the heading "Reconciliation of Non-GAAP Financial Information to GAAP" immediately following the Condensed Consolidated Statements of Operations included below.

Cash

The Company's cash balance was $79.4 million at March 31, 2014 as compared to $91.9 million as of December 31, 2013. The Company used approximately $3.0 million of cash from operations in the first quarter, and incurred planned capital expenditures primarily related to the purchase of servers and computer networking equipment and expansion of its corporate offices, resulting in a cash outlay of approximately $1.5 million. As part of its previously announced stock repurchase program, the Company spent approximately $7.8 million during the first quarter of 2014 to repurchase shares of its common stock.

Financial Expectations

Following is the Company's current expectation for financial and operating performance:

Second Quarter 2014

    --  Revenue of $49.0 - $50.0 million
    --  Diluted adjusted EBITDA of $0.07 - $0.09 per share
    --  Diluted adjusted net income of $0.04 - $0.06 per share
    --  Diluted GAAP EPS of $(0.04) - $(0.02)
    --  Fully diluted share count of approximately 56.2 million

Full Year 2014

    --  Revenue of $199.0 - $204.0 million
    --  Diluted adjusted EBITDA of $0.37 - $0.41 per share
    --  Diluted adjusted net income of $0.21 - $0.25 per share
    --  Diluted GAAP EPS of $(0.11) - $(0.07)
    --  Fully diluted share count of approximately 56.2 million

Other Full Year 2014 Assumptions

    --  Amortization of purchased intangibles of approximately $4 million
    --  Stock-compensation expense of approximately $14 million
    --  Effective tax rate of approximately 23%
    --  Depreciation of approximately $10 million
    --  Capital expenditures of approximately $11 million

Stock-Based Compensation

Included in the accompanying financial results are expenses related to stock-based compensation, as follows (in thousands):


                                           Three Months Ended

                                             March 31, 2014
                                             --------------

    Cost of revenue                                         $360

    Sales and marketing                                      814

    General and administrative                               843

    Product development                                      680
                                                             ---

      Total                                               $2,697
                                                          ======

Amortization of Purchased Intangible Assets

Included in the accompanying financial results are expenses related to the amortization of purchased intangible assets, as follows (in thousands):


                                           Three Months Ended

                                             March 31, 2014
                                             --------------

    Cost of revenue                                         $868

    General and administrative                               190
                                                             ---

      Total                                               $1,058
                                                          ======

Earnings Teleconference and Video Discussion Information

The Company will discuss its first quarter 2014 financial results during a teleconference today, May 7, 2014. To participate via telephone, callers should dial in five to ten minutes prior to the 5:00pm Eastern start time; domestic callers (U.S. and Canada) should dial 877-507-3684, while international callers should dial 706-634-9559, both should reference the conference ID "35784095". The conference call will also be simulcast live on the Internet and can be accessed by logging onto the investor relations section of the Company's web site at http://www.liveperson.com/about/ir.

If you are unable to participate in the live call, the teleconference will be available for replay approximately two hours after the call. To access the replay, please call 855-859-2056 (U.S. and Canada) or 404-537-3406 (international). Please reference the conference ID "35784095". A replay will also be available on the investor relations section of the Company's web site at http://www.liveperson.com/about/ir.

The Company will also post a video discussion of its first quarter results on YouTube. To view, click on the following link: http://www.youtube.com/user/myliveperson.

About LivePerson

LivePerson, Inc. (NASDAQ: LPSN) offers a cloud-based platform that enables businesses to proactively connect in real-time with their customers via chat, voice, and content delivery at the right time, through the right channel, including websites, social media, and mobile devices. This "intelligent engagement" is driven by real-time behavioral analytics, producing connections based on a true understanding of business objectives and customer needs.

For more information, please visit www.liveperson.com. To view other global press releases about LivePerson, please visit pr.liveperson.com.

Non-GAAP Financial Disclosure

Investors are cautioned that the following financial measures used in this press release are defined as "non-GAAP financial measures" by the Securities and Exchange Commission, or SEC: adjusted EBITDA, or earnings/(loss) before other income/(expense), taxes, depreciation, amortization, stock-based compensation, other non-cash charges, if any; and adjusted net income, or net income excluding amortization of purchased intangible assets and stock-based compensation. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation. In addition, although we have provided a reconciliation of these measures to the nearest comparable GAAP measures, they should not be construed as alternatives to any other measures of performance determined in accordance with generally accepted accounting principles, or as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address. We present this financial information because we believe that it is helpful to some investors as a measure of our performance. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions; accordingly, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.

Safe Harbor Provision

Statements in this press release regarding LivePerson that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including but not limited to financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. It is routine for our internal projections and expectations to change as the quarter and year progress, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations may change. Although these expectations may change, we are under no obligation to inform you if they do. Actual events or results may differ materially from those contained in the projections or forward-looking statements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: potential fluctuations in our quarterly revenue and operating results; competition in the markets for online sales, marketing and customer service solutions, and online consumer services; our ability to retain existing clients and attract new clients; risks related to new regulatory or other legal requirements that could materially impact our business; volatility of the value of certain currencies in relation to the U.S. dollar, particularly the currency of regions where we have operations; additional regulatory requirements, tax liabilities, currency exchange rate fluctuations and other risks as we expand internationally and/or as we expand into direct-to-consumer services; impairments to goodwill that result in significant charges to earnings; responding to rapid technological change and changing client preferences; the adverse effect that the global economic downturn may have on our business and results of operations; our ability to retain key personnel, attract new personnel and to manage staff attrition; our ability to expand our operations internationally; risks related to the ability to successfully integrate past or potential future acquisitions; failures or security breaches in our services, those of our third party providers, or in the websites of our customers; risks related to the regulation or possible misappropriation of personal information belonging to our customers' Internet users; technology systems beyond our control and technology-related defects that could disrupt the LivePerson services; privacy concerns relating to the Internet that could result in new legislation or negative public perception; legal liability and/or negative publicity for the services provided to consumers via our technology platforms; risks related to protecting our intellectual property rights or potential infringement of the intellectual property rights of third parties; risks related to technological or other defects distributing our services; increased allowances for doubtful accounts as a result of an increasing amount of receivables due from customers with greater credit risk; delays in our implementation cycles; risks associated with the recent volatility in the capital markets; our ability to secure additional financing to execute our business strategy; risks associated with our current or any future stock repurchase programs, including whether such programs will enhance long-term stockholder value, and whether such stock repurchases could increase the volatility of the price of our common stock and diminish our cash reserves; our ability to license necessary third party software for use in our products and services, and our ability to successfully integrate third party software; changes in accounting principles generally accepted in the United States; our ability to maintain our reputation; risks related to our complex products; our recognition of revenue from subscriptions; our lengthy sales cycles; risks related to our operations in Israel, and the civil and political unrest in that region; natural catastrophic events and interruption to our business by man-made problems; the high volatility of our stock price; and risks related to our common stock being traded on more than one securities exchange. This list is intended to identify only certain of the principal factors that could cause actual results to differ from those discussed in the forward-looking statements. Readers are referred to the reports and documents filed from time to time by us with the Securities and Exchange Commission for a discussion of these and other important risk factors that could cause actual results to differ from those discussed in forward-looking statements.


                                                            LivePerson, Inc.

                                            Condensed Consolidated Statements of Operations

                                            (In Thousands, Except Share and Per Share Data)

                                                               Unaudited


                                                                             Three Months Ended

                                                                                  March 31,
                                                                                  ---------

                                                                                                 2014                 2013
                                                                                                 ----                 ----

    Revenue                                                                                   $47,828              $42,496
                                                                                              -------              -------


    Costs and expenses:

                         Cost of
                         revenue                   11,735                                      10,134

                         Sales and
                         marketing                 18,395                                      14,478

                         General and
                         administrative             9,499                                      10,238

                         Product
                         development                8,951                                       8,021

                         Amortization
                         of purchased
                         intangibles                  190                                         224


                            Total cost and
                             expenses              48,770                                      43,095



    Loss from operations                                                                         (942)                (599)


    Other (expense) income                                                                        (83)                  34
                                                                                                  ---                  ---


    Loss before benefit from income taxes                                                      (1,025)                (565)


    Benefit from income taxes                                                                    (231)                (333)
                                                                                                 ----                 ----


    Net loss                                                                                    $(794)               $(232)
                                                                                                =====                =====



    Net loss per share of common stock:


                        Basic                                  $(0.01)                                     $(0.00)



                        Diluted                                $(0.01)                                     $(0.00)



    Weighted-average shares used to compute
     net loss per share:



                        Basic                              54,666,535                                  55,864,045



                        Diluted                            54,666,535                                  55,864,045


                                                                                                                 LivePerson, Inc.

                                                                                             Reconciliation of Non-GAAP Financial Information to GAAP

                                                                                                 (In Thousands, Except Share and Per Share Data)

                                                                                                                    Unaudited



    Unaudited Supplemental Data
    ---------------------------

                                              The following information is not a financial measure under generally accepted
                                              accounting principles (GAAP). In addition, it should not be construed as an
                                              alternative to any other measures of performance determined in accordance with
                                              GAAP, or as an indicator of our operating performance, liquidity or cash flows
                                              generated by operating, investing and financing activities as there may be
                                              significant factors or trends that it fails to address. We present this
                                              financial information because we believe that it is helpful to some investors
                                              as one measure of our operations. We caution investors that non-GAAP
                                              financial information, by its nature, departs from traditional accounting
                                              conventions; accordingly, its use can make it difficult to compare our results
                                              with our results from other reporting periods and with the results of other
                                              companies.


                                                                                                                                                               Three Months Ended

                                                                                                                                                                    March 31,
                                                                                                                                                                    ---------

                                                                                                                                                                                   2014    2013
                                                                                                                                                                                   ----    ----

    Net loss in accordance with generally accepted

                                             accounting principles                                                                                      $(794)                    $(232)

                                             Add/(less):

                                             (a)  Amortization of purchased intangibles                                                                 1,058                       418

                                             (b)  Stock-based compensation                                                                              2,697                     3,051

                                             (c)  Depreciation                                                                                          1,981                     2,050

                                             (d)  Benefit from income taxes                                                                              (231)                     (333)

                                             (e)  Other expense (income)                                                                                   83                       (34)


    Adjusted EBITDA (1)                                                                                                                                                          $4,794  $4,920
                                                                                                                                                                                 ======  ======

    Diluted adjusted EBITDA per common share                                                                                                                                      $0.09   $0.09
                                                                                                                                                                                  =====   =====


    Weighted average shares used in diluted adjusted EBITDA

                                             per common share                                                                                      56,003,074                57,872,732




    Net loss in accordance with generally accepted

                                             accounting principles                                                                                      $(794)                    $(232)

                                             Add:

                                             (a)  Amortization of purchased intangibles                                                                 1,058                       418

                                             (b)  Stock-based compensation                                                                              2,697                     3,051


    Adjusted net income                                                                                                                                                          $2,961  $3,237
                                                                                                                                                                                 ======  ======

    Diluted adjusted net income per common share                                                                                                                                  $0.05   $0.06
                                                                                                                                                                                  =====   =====


    Weighted average shares used in diluted adjusted net income

                                             per common share                                                                                      56,003,074                57,872,732




    Adjusted EBITDA                                                                                                                                                              $4,794  $4,920

                                             Add/(less):

                                             (a)  Changes in operating assets and liabilities                                                          (8,136)                   (6,295)

                                             (b)  Provision for doubtful accounts                                                                         271                         -

                                             (c)  Benefit from income taxes                                                                               231                       333

                                             (d)  Deferred income taxes                                                                                   (76)                      352

                                             (e)  Other (expense) income                                                                                  (83)                       34


    Net cash used in operating activities                                                                                                                                       $(2,999)  $(656)
                                                                                                                                                                                =======   =====


    (1)  Earnings/(loss) before other income/(expense), taxes, depreciation, amortization, stock-based compensation and other non-cash charges.


                                                      LivePerson, Inc.

                                            Condensed Consolidated Balance Sheets

                                                       (In Thousands)

                                                          Unaudited




                                                                  March 31, 2014               December 31, 2013
                                                                  --------------               -----------------


    ASSETS


    CURRENT ASSETS:

                       Cash and cash
                       equivalents                  $79,373                            $91,906

                       Accounts
                       receivable,
                       net                28,936                               29,489

                       Prepaid
                       expenses and
                       other current
                       assets              9,363                                6,361

                       Deferred tax
                       assets, net         4,360                                5,426
                      ---------

                         Total current
                          assets         122,032                              133,182


                       Property and
                       equipment,
                       net                17,481                               17,618

                       Intangibles,
                       net                12,130                               13,088

                      Goodwill            33,124                               32,724

                       Deferred tax
                       assets, net         6,897                                6,243

                      Other assets         4,952                                2,235
                      ---------

                         Total assets              $196,616                           $205,090
                      ============


    LIABILITIES AND STOCKHOLDERS' EQUITY


    CURRENT LIABILITIES:

                       Accounts
                       payable                      $11,686                            $10,139

                       Accrued
                       expenses           20,475                               25,419

                       Deferred
                       revenue             7,620                                8,747
                      ---------

                         Total current
                          liabilities     39,781                               44,305


    Deferred revenue, net of
     current                                                                        -                              468

    Other liabilities                                                             850                            1,264
                                                                                  ---                            -----

                         Total
                          liabilities     40,631                               46,037
                      ---------


    Commitments and contingencies


    Total stockholders' equity                                                155,985                          159,053
                                                                              -------                          -------

                         Total
                          liabilities
                          and
                          stockholders'
                          equity                   $196,616                           $205,090
                       =============

Investor contact:
Stacey Yonkus
212-609-4236
syonkus@liveperson.com

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SOURCE LivePerson, Inc.