LIVEPERSON,
INC.
|
(Exact
Name of Registrant as Specified in Its
Charter)
|
DELAWARE
|
13-3861628
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(IRS
Employer Identification No.)
|
462
SEVENTH AVENUE
NEW
YORK, NEW YORK
|
10018
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
(212)
609-4200
|
(Registrant’s
Telephone Number, Including Area
Code)
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Smaller
reporting company ¨
|
|
(Do
not check if a smaller reporting company)
|
PAGE
|
||
PART
I.
|
FINANCIAL
INFORMATION
|
4
|
ITEM
1.
|
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
|
4
|
CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2008 (UNAUDITED) AND
DECEMBER
31, 2007
|
4
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED
MARCH 31, 2008 AND 2007
|
5
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS
ENDED
MARCH 31, 2008 AND 2007
|
6
|
|
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
8
|
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
19
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
27
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
27
|
PART
II.
|
OTHER
INFORMATION
|
28
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
28
|
ITEM
1A.
|
RISK
FACTORS
|
29
|
ITEM
2.
|
PURCHASES
OF EQUITY SECURITIES BY THE ISSUER
|
29
|
ITEM
6.
|
EXHIBITS
|
30
|
March 31, 2008
|
December 31, 2007
|
||||||
(Unaudited)
|
(Note
1(B))
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
21,542
|
$
|
26,222
|
|||
Accounts
receivable, net of allowances for doubtful accounts of $270 and $208
as of
March 31, 2008 and December 31, 2007, respectively
|
7,247
|
6,026
|
|||||
Prepaid
expenses and other current assets
|
1,844
|
1,802
|
|||||
Deferred
tax assets, net
|
-
|
42
|
|||||
Total
current assets
|
30,633
|
34,092
|
|||||
Property
and equipment, net
|
4,752
|
3,733
|
|||||
Intangibles,
net
|
6,255
|
6,953
|
|||||
Goodwill
|
51,783
|
51,684
|
|||||
Deferred
tax assets, net
|
4,272
|
4,202
|
|||||
Security
deposits
|
337
|
499
|
|||||
Other
assets
|
1,527
|
1,325
|
|||||
Total
assets
|
$
|
99,559
|
$
|
102,488
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
3,770
|
$
|
3,067
|
|||
Accrued
expenses
|
5,759
|
9,191
|
|||||
Deferred
revenue
|
4,941
|
4,000
|
|||||
Deferred
tax liabilities, net
|
208
|
193
|
|||||
Total
current liabilities
|
14,678
|
16,451
|
|||||
Other
liabilities
|
1,527
|
1,325
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $.001 par value per share; 5,000,000 shares authorized, 0
shares
issued and outstanding at March 31, 2008 and December 31,
2007
|
—
|
—
|
|||||
Common
stock, $.001 par value per share; 100,000,000 shares authorized,
47,482,357 shares issued and outstanding at March 31, 2008 and 47,892,128
shares issued and outstanding at December 31, 2007
|
47
|
48
|
|||||
Additional
paid-in capital
|
176,904
|
178,041
|
|||||
Accumulated
deficit
|
(93,570
|
)
|
(93,358
|
)
|
|||
Accumulated
other comprehensive loss
|
(27
|
)
|
(19
|
)
|
|||
Total
stockholders’ equity
|
83,354
|
84,712
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
99,559
|
$
|
102,488
|
Three Months Ended
March 31,
|
|||||||
2008
|
2007
|
||||||
Revenue
|
$
|
17,085
|
$
|
10,969
|
|||
Operating
expenses:
|
|||||||
Cost
of revenue
|
4,886
|
2,789
|
|||||
Product
development
|
3,074
|
1,820
|
|||||
Sales
and marketing
|
5,798
|
3,402
|
|||||
General
and administrative
|
3,180
|
2,020
|
|||||
Amortization
of intangibles
|
391
|
242
|
|||||
Total
operating expenses
|
17,329
|
10,273
|
|||||
(Loss)
Income from operations
|
(244
|
)
|
696
|
||||
Other
income:
|
|||||||
Interest
income
|
81
|
222
|
|||||
(Loss)
Income before provision for income taxes
|
(163
|
)
|
918
|
||||
Provision
for income taxes
|
49
|
-
|
|||||
Net
(loss) income
|
$
|
(212
|
)
|
$
|
918
|
||
Basic
net (loss) income per common share
|
$
|
(0.00
|
)
|
$
|
0.02
|
||
Diluted
net (loss) income per common share
|
$
|
(0.00
|
)
|
$
|
0.02
|
||
Weighted
average shares outstanding used in basic net (loss) income per common
share calculation
|
47,892,703
|
41,297,515
|
|||||
Weighted
average shares outstanding used in diluted net (loss) income per
common
share calculation
|
47,892,703
|
44,761,279
|
Three
Months Ended
March
31,
|
|||||||
2008
|
2007
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
(loss) income
|
$
|
(212
|
)
|
$
|
918
|
||
Adjustments
to reconcile net (loss) income to net cash provided by operating
activities:
|
|||||||
Stock-based
compensation expense
|
959
|
815
|
|||||
Depreciation
|
323
|
208
|
|||||
Amortization
of intangibles
|
698
|
325
|
|||||
Deferred
income taxes
|
(13
|
)
|
(1,029
|
)
|
|||
Provision
for doubtful accounts
|
68
|
20
|
|||||
CHANGES
IN OPERATING ASSETS AND LIABILITIES:
|
|||||||
Accounts
receivable
|
(1,289
|
)
|
(608
|
)
|
|||
Prepaid
expenses and other current assets
|
(42
|
)
|
132
|
||||
Security
deposits
|
162
|
15
|
|||||
Other
non-current assets
|
(202
|
)
|
-
|
||||
Accounts
payable
|
1,232
|
(47
|
)
|
||||
Accrued
expenses
|
(3,153
|
)
|
(
753
|
)
|
|||
Deferred
revenue
|
941
|
684
|
|||||
Other
liabilities
|
201
|
-
|
|||||
Net
cash (used in) provided by operating activities
|
(327
|
)
|
680
|
||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchases
of property and equipment, including capitalized software
|
(2,453
|
)
|
(427
|
)
|
|||
Acquisition
of Kasamba, net of cash
|
(78
|
)
|
-
|
||||
Acquisition
of Proficient
|
(56
|
)
|
(15
|
)
|
|||
Net
cash used in investing activities
|
(2,587
|
)
|
(442
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Repurchase
of common stock
|
(2,023
|
)
|
-
|
||||
Excess
tax benefit from the exercise of employee stock options
|
(70
|
)
|
907
|
||||
Proceeds
from issuance of common stock in connection with the exercise of
options
|
335
|
1,020
|
|||||
Net
cash (used in) provided by financing activities
|
(1,758
|
)
|
1,927
|
||||
Effect
of foreign exchange rate changes on cash and cash
equivalents
|
(8
|
)
|
(6
|
)
|
|||
Net
(decrease) increase in cash and cash equivalents
|
(4,680
|
)
|
2,159
|
||||
Cash
and cash equivalents at the beginning of the period
|
26,222
|
21,729
|
|||||
Cash
and cash equivalents at the end of the period
|
$
|
21,542
|
$
|
23,888
|
Three
Months Ended
March
31,
|
|||||||
2008
|
2007
|
||||||
Cost
of revenue
|
$
|
114
|
$
|
95
|
|||
Product
development expense
|
291
|
255
|
|||||
Sales
and marketing expense
|
289
|
248
|
|||||
General
and administrative expense
|
265
|
217
|
|||||
Total
stock based compensation included in operating expenses
|
$
|
959
|
$
|
815
|
Three Months Ended
March 31,
|
|||||||
2008
|
2007
|
||||||
Dividend
yield
|
0.0
|
%
|
0.0
|
%
|
|||
Risk-free
interest rate
|
3.5% - 3.8
|
%
|
4.9
|
%
|
|||
Expected
life (in years)
|
4.2
|
4.2
|
|||||
Historical
volatility
|
71.5
|
%
|
75.7
|
%
|
Options
|
Weighted
Average Exercise
Price
|
||||||
Options outstanding at
December 31, 2007
|
8,997,366
|
$
|
3.72
|
||||
Options
granted
|
423,000
|
$
|
3.44
|
||||
Options
exercised
|
(299,900
|
)
|
$
|
1.12
|
|||
Options
cancelled
|
(128,766
|
)
|
$
|
5.35
|
|||
Options
outstanding at March 31, 2008
|
8,991,700
|
$
|
3.77
|
||||
Options
exercisable at March 31, 2008
|
5,190,994
|
$
|
2.93
|
Shares
|
Weighted
Average Grant-Date Fair Value
|
||||||
Nonvested Shares
at December 31, 2007
|
4,349,083
|
$
|
3.18
|
||||
Granted
|
423,000
|
$
|
1.97
|
||||
Vested
|
(842,611
|
)
|
$
|
3.04
|
|||
Cancelled
|
(128,766
|
)
|
$
|
3.42
|
|||
Nonvested
Shares at March 31, 2008
|
3,800,706
|
$
|
3.05
|
Three Months Ended March 31,
|
|||||||
2008
|
2007
|
||||||
Basic
|
47,892,703
|
41,297,515
|
|||||
Effect
of assumed exercised options and warrants
|
-
|
3,463,764
|
|||||
Diluted
|
47,892,703
|
44,761,279
|
Consolidated
|
Business
|
Consumer
|
||||||||
Revenue:
|
||||||||||
Hosted
services
|
$
|
13,710
|
$
|
13,710
|
$
|
—
|
||||
Expert
advice
|
2,684
|
—
|
2,684
|
|||||||
Professional
services
|
691
|
691
|
—
|
|||||||
Total
revenue
|
$
|
17,085
|
$
|
14,401
|
$
|
2,684
|
||||
Cost
of revenue
|
4,886
|
3,994
|
892
|
|||||||
Sales
and marketing
|
5,798
|
4,083
|
1,715
|
|||||||
Amortization
of intangibles
|
391
|
242
|
149
|
|||||||
Unallocated
corporate expenses
|
6,254
|
—
|
—
|
|||||||
Operating
(loss) income
|
$
|
(244
|
)
|
$
|
6,082
|
$
|
(72
|
)
|
United
States
|
$
|
13,332
|
||
United
Kingdom
|
1,773
|
|||
Other
countries
|
1,980
|
|||
Total
revenue
|
$
|
17,085
|
United
States
|
$
|
27,382
|
||
Israel
|
41,544
|
|||
Total
long-lived assets
|
$
|
68,926
|
Total
|
Business
|
Consumer
|
||||||||
Balance
as of December 31, 2007
|
$
|
51,684
|
$
|
18,744
|
$
|
32,940
|
||||
Adjustments
to goodwill:
|
||||||||||
Contingent
earnout payments
|
92
|
92
|
-
|
|||||||
Other
|
7
|
-
|
7
|
|||||||
Balance
as of March 31, 2008
|
$
|
51,783
|
$
|
18,836
|
$
|
32,947
|
Total
|
Business
|
Consumer
|
||||||||
Balance
as of December 31, 2006
|
$
|
9,673
|
$
|
9,673
|
$
|
-
|
||||
Adjustments
to goodwill:
|
||||||||||
Acquisitions
|
32,940
|
-
|
32,940
|
|||||||
Contingent
earnout payments
|
8,914
|
8,914
|
-
|
|||||||
Other
|
157
|
157
|
-
|
|||||||
Balance
as of December 31, 2007
|
$
|
51,684
|
$
|
18,744
|
$
|
32,940
|
As of March 31, 2008
|
||||||||||
Gross
Carrying
Amount
|
Weighted
Average
Amortization
Period
|
Accumulated
Amortization
|
||||||||
Amortizing intangible
assets:
|
||||||||||
Technology
|
$
|
5,410
|
3.8
years
|
$
|
1,114
|
|||||
Customer
contracts/customer lists
|
2,633
|
2.9
years
|
1,565
|
|||||||
Trade
names
|
630
|
3.0
years
|
105
|
|||||||
Non-compete
agreements
|
410
|
1.2
years
|
240
|
|||||||
Other
|
235
|
3.0
years
|
39
|
|||||||
Total
|
$
|
9,318
|
$
|
3,063
|
As of December 31, 2007
|
||||||||||
Gross
Carrying
Amount
|
Weighted
Average
Amortization
Period
|
Accumulated
Amortization
|
||||||||
Amortizing intangible
assets:
|
||||||||||
Technology
|
$
|
5,410
|
3.8
years
|
$
|
807
|
|||||
Customer
contracts/customer lists
|
2,633
|
2.9
years
|
1,334
|
|||||||
Trade
names
|
630
|
3.0
years
|
53
|
|||||||
Non-compete
agreements
|
410
|
1.2
years
|
151
|
|||||||
Other
|
235
|
3.0
years
|
20
|
|||||||
Total
|
$
|
9,318
|
$
|
2,365
|
March 31, 2008
|
December 31, 2007
|
||||||
Computer
equipment and software
|
$
|
7,395
|
$
|
6,033
|
|||
Furniture,
equipment and building improvements
|
545
|
565
|
|||||
7,940
|
6,598
|
||||||
Less
accumulated depreciation
|
3,188
|
2,865
|
|||||
Total
|
$
|
4,752
|
$
|
3,733
|
March 31, 2008
|
December 31, 2007
|
||||||
Payroll
and other employee related costs
|
$
|
3,155
|
$
|
4,790
|
|||
Professional
services and consulting and other vendor fees
|
2,109
|
3,856
|
|||||
Sales
commissions
|
254
|
286
|
|||||
Restructuring
(see note 3)
|
19
|
49
|
|||||
Other
|
222
|
210
|
|||||
Total
|
$
|
5,759
|
$
|
9,191
|
Balance as of
January 1, 2008
|
Provision for the
three months ended
March 31, 2008
|
Net utilization
during the three
months ended
March 31, 2008
|
Balance as of
March 31, 2008
|
||||||||||
Contract
terminations
|
$
|
49
|
$
|
—
|
$
|
(30
|
)
|
$
|
19
|
||||
Total
|
$
|
49
|
$
|
—
|
$
|
(30
|
)
|
$
|
19
|
Balance as of
January 1, 2007
|
Provision for the
year ended
December 31, 2007
|
Net utilization during
the year ended
December 31, 2007
|
Balance as of
December 31, 2007
|
||||||||||
Severance
|
$
|
168
|
$
|
—
|
$
|
(168
|
)
|
$
|
—
|
||||
Contract
terminations
|
149
|
67
|
(167
|
)
|
49
|
||||||||
Total
|
$
|
317
|
$
|
67
|
$
|
(335
|
)
|
$
|
49
|
Weighted
Average Useful
Life (months)
|
Amount
|
||||||
Customer relationships
|
36
|
$
|
2,400
|
||||
Technology
|
18
|
500
|
|||||
Non-compete
agreements
|
24
|
100
|
|||||
$
|
3,000
|
Weighted
Average Useful
Life (months)
|
Amount
|
||||||
Technology
|
48
|
$
|
4,910
|
||||
Trade
name
|
36
|
630
|
|||||
Expert
network
|
36
|
235
|
|||||
Non-compete
agreements
|
12
|
310
|
|||||
$
|
6,085
|
ITEM 2. |
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
· |
compensation
costs relating to employees who provide customer support and
implementation services to our
clients;
|
· |
compensation
costs relating to our network support
staff;
|
· |
allocated
occupancy costs and related overhead;
|
· |
the
cost of supporting our infrastructure, including expenses related
to
server leases, infrastructure support costs and Internet connectivity,
as
well as depreciation of certain hardware and software;
and
|
· |
the
credit card fees and related processing costs associated with the
Kasamba
services.
|
Three Months Ended
March 31,
|
|||||||
2008
|
2007
|
||||||
Stock-based
compensation expense related to SFAS No. 123(R)
|
$
|
959
|
$
|
815
|
|||
Total
|
$
|
959
|
$
|
815
|
Payments
due by period
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||
Contractual
Obligations
|
Total
|
|
|
Less than 1
year
|
|
|
1-3 years
|
|
|
3-5 years
|
|
|
More than 5
years
|
|||
Operating
leases
|
$
|
7,484
|
$
|
3,241
|
$
|
4,048
|
$
|
195
|
$
|
—
|
||||||
Total
|
$
|
7,484
|
$
|
3,241
|
$
|
4,048
|
$
|
195
|
$
|
—
|
Period
|
Total Number of
Shares Purchased
|
Average Price Paid per
Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs
|
Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under
the Plans or
Programs
|
|||||||||
1/1/2008 –
1/31/2008
|
—
|
—
|
—
|
$
|
8,000,000
|
||||||||
2/1/2008
– 2/29/2008
|
325,229
|
$
|
3.49
|
325,229
|
$
|
6,865,000
|
|||||||
3/1/2008
– 3/31/2008
|
385,693
|
$
|
3.11
|
385,693
|
$
|
5,665,000
|
|||||||
Total
|
710,922
|
$
|
3.28
|
710,922
|
$
|
5,665,000
|
10.1
|
Letter
Agreement dated August 27, 2004, between LivePerson, Inc. and Kevin
Kohn
|
10.2
|
Letter
Agreement dated November 3, 2004, between LivePerson, Inc. and James
Dicso
|
10.3
|
Employment
agreement dated February 21, 2007, between LivePerson, Inc. and Eli
Campo
|
31.1
|
Certification
by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certification
by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
Certification
by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
LIVEPERSON,
INC.
|
||
(Registrant)
|
||
Date:
May 9, 2008
|
By:
|
/s/
ROBERT P. LOCASCIO
|
Name:
|
Robert
P. LoCascio
|
|
Title:
|
Chief
Executive Officer (duly authorized officer)
|
|
Date:
May 9, 2008
|
By:
|
/s/
TIMOTHY E. BIXBY
|
Name:
|
Timothy
E. Bixby
|
|
Title:
|
President
and Chief Financial Officer (principal financial and accounting
officer)
|
EXHIBIT | |
Letter
Agreement dated August 27, 2004, between LivePerson, Inc. and Kevin
Kohn
|
|
10.2
|
Letter
Agreement dated November 3, 2004, between LivePerson, Inc. and James
Dicso
|
10.3
|
Employment
agreement dated February 21, 2007, between LivePerson, Inc. and Eli
Campo
|
31.1
|
Certification
by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certification
by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
32.2
|
Certification
by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|