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)
|
Accelerated
filer x
|
|
Smaller
reporting company o
|
|
(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 SEPTEMBER 30, 2008 (UNAUDITED)
AND
DECEMBER 31, 2007
|
4
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND NINE
MONTHS
ENDED SEPTEMBER 30, 2008 AND 2007
|
5
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS
ENDED
SEPTEMBER 30, 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
|
28
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
28
|
PART
II.
|
OTHER
INFORMATION
|
30
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
30
|
ITEM 1A.
|
RISK
FACTORS
|
30
|
ITEM
2.
|
PURCHASES
OF EQUITY SECURITIES BY THE ISSUER
|
31
|
ITEM
6.
|
EXHIBITS
|
31
|
September 30, 2008
|
December 31, 2007
|
||||||
(Unaudited)
|
(Note
1(B))
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
23,773
|
$
|
26,222
|
|||
Accounts
receivable, net of allowances for doubtful accounts of $260 and $208
as of
September 30, 2008 and December 31, 2007, respectively
|
6,910
|
6,026
|
|||||
Prepaid
expenses and other current assets
|
2,270
|
1,802
|
|||||
Deferred
tax assets, net
|
1,569
|
42
|
|||||
Total
current assets
|
34,522
|
34,092
|
|||||
Property
and equipment, net
|
7,462
|
3,733
|
|||||
Intangibles,
net
|
4,898
|
6,953
|
|||||
Goodwill
|
47,971
|
51,684
|
|||||
Deferred
tax assets, net
|
6,336
|
4,202
|
|||||
Security
deposits
|
385
|
499
|
|||||
Other
assets
|
1,677
|
1,325
|
|||||
Total
assets
|
$
|
103,251
|
$
|
102,488
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
4,022
|
$
|
3,067
|
|||
Accrued
expenses
|
8,366
|
9,191
|
|||||
Deferred
revenue
|
4,408
|
4,000
|
|||||
Deferred
tax liabilities, net
|
-
|
193
|
|||||
Total
current liabilities
|
16,796
|
16,451
|
|||||
Other
liabilities
|
1,677
|
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 September 30, 2008 and December 31,
2007
|
—
|
—
|
|||||
Common
stock, $.001 par value per share; 100,000,000 shares authorized,
47,300,048 shares issued and outstanding at September 30, 2008 and
47,892,128 shares issued and outstanding at December 31,
2007
|
47
|
48
|
|||||
Additional
paid-in capital
|
178,143
|
178,041
|
|||||
Accumulated
deficit
|
(93,351
|
)
|
(93,358
|
)
|
|||
Accumulated
other comprehensive loss
|
(61
|
)
|
(19
|
)
|
|||
Total
stockholders’ equity
|
84,778
|
84,712
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
103,251
|
$
|
102,488
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Revenue
|
$
|
19,375
|
$
|
12,823
|
$
|
55,048
|
$
|
35,453
|
|||||
Operating
expenses:
|
|||||||||||||
Cost
of revenue
|
5,226
|
3,305
|
15,346
|
9,199
|
|||||||||
Product
development
|
3,299
|
2,169
|
9,876
|
6,033
|
|||||||||
Sales
and marketing
|
6,624
|
3,556
|
18,864
|
10,470
|
|||||||||
General
and administrative
|
3,399
|
2,274
|
10,034
|
6,353
|
|||||||||
Amortization
of intangibles
|
352
|
242
|
1,134
|
725
|
|||||||||
Total
operating expenses
|
18,900
|
11,546
|
55,254
|
32,780
|
|||||||||
Income
(loss) from operations
|
475
|
1,277
|
(206
|
)
|
2,673
|
||||||||
Other
(expense) income:
|
|||||||||||||
Financial
(expense) income
|
(123
|
)
|
26
|
(125
|
)
|
5
|
|||||||
Interest
income
|
79
|
283
|
270
|
739
|
|||||||||
Total
other (expense) income, net
|
(44
|
)
|
309
|
145
|
744
|
||||||||
Income
(loss) before provision for (benefit from) income taxes
|
431
|
1,586
|
(61
|
)
|
3,417
|
||||||||
Provision
for (benefit from) income taxes
|
21
|
-
|
(68
|
)
|
-
|
||||||||
Net
income
|
$
|
410
|
$
|
1,586
|
$
|
7
|
$
|
3,417
|
|||||
Basic
net income per common share
|
$
|
0.01
|
$
|
0.04
|
$
|
0.00
|
$
|
0.08
|
|||||
Diluted
net income per common share
|
$
|
0.01
|
$
|
0.03
|
$
|
0.00
|
$
|
0.07
|
|||||
Weighted
average shares outstanding used in basic net income per common
share
calculation
|
47,229,252
|
43,080,475
|
47,433,924
|
42,469,631
|
|||||||||
Weighted
average shares outstanding used in diluted net income per common
share
calculation
|
48,678,016
|
46,328,876
|
49,064,151
|
45,942,436
|
Nine Months Ended
September 30,
|
|||||||
2008
|
2007
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income
|
$
|
7
|
$
|
3,417
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Stock-based
compensation expense
|
3,178
|
2,642
|
|||||
Depreciation
|
1,324
|
585
|
|||||
Amortization
of intangibles
|
2,055
|
978
|
|||||
Deferred
income taxes
|
(39
|
)
|
(3,521
|
)
|
|||
Provision
for doubtful accounts
|
68
|
74
|
|||||
CHANGES
IN OPERATING ASSETS AND LIABILITIES:
|
|||||||
Accounts
receivable
|
(952
|
)
|
(1,595
|
)
|
|||
Prepaid
expenses and other current assets
|
(468
|
)
|
27
|
||||
Security
deposits
|
114
|
13
|
|||||
Accounts
payable
|
1,054
|
90
|
|||||
Accrued
expenses
|
(494
|
)
|
1,048
|
||||
Deferred
revenue
|
408
|
823
|
|||||
Net
cash provided by operating activities
|
6,255
|
4,581
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchases
of property and equipment, including capitalized software
|
(5,393
|
)
|
(614
|
)
|
|||
Prepaid
acquisition costs
|
-
|
(122
|
)
|
||||
Acquisition
of Kasamba
|
(112
|
)
|
-
|
||||
Acquisition
of Proficient
|
(132
|
)
|
(218
|
)
|
|||
Net
cash used in investing activities
|
(5,637
|
)
|
(954
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Excess
tax benefit from the exercise of employee stock options
|
-
|
3,302
|
|||||
Proceeds
from issuance of common stock in connection with the exercise of
options
|
655
|
1,513
|
|||||
Repurchase
of common stock
|
(3,680
|
)
|
-
|
||||
Net
cash (used in) provided by financing activities
|
(3,025
|
)
|
4,815
|
||||
Effect
of foreign exchange rate changes on cash and cash
equivalents
|
(42
|
)
|
(7
|
)
|
|||
Net
(decrease) increase in cash and cash equivalents
|
(2,449
|
)
|
8,435
|
||||
Cash
and cash equivalents at the beginning of the period
|
26,222
|
21,729
|
|||||
Cash
and cash equivalents at the end of the period
|
$
|
23,773
|
$
|
30,164
|
Three
Months Ended
September 30, |
Nine
Months Ended
September
30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Cost
of revenue
|
$
|
145
|
$
|
105
|
$
|
420
|
$
|
314
|
|||||
Product
development expense
|
302
|
317
|
1,015
|
858
|
|||||||||
Sales
and marketing expense
|
292
|
245
|
881
|
749
|
|||||||||
General
and administrative expense
|
275
|
263
|
862
|
721
|
|||||||||
Total
stock based compensation included in operating expenses
|
$
|
1,014
|
$
|
930
|
$
|
3,178
|
$
|
2,642
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Dividend
yield
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
|||||
Risk-free
interest rate
|
3.9%-4.0
|
%
|
4.8%-5.3
|
%
|
1.9%-4.0
|
%
|
4.7%-5.3
|
%
|
|||||
Expected
life (in years)
|
4.9
|
4.2
|
4.2-4.9
|
4.2
|
|||||||||
Historical
volatility
|
68.5
|
%
|
73.0%-73.4
|
%
|
68.5%-71.5
|
%
|
73.0%-75.7
|
%
|
Options
|
Weighted
Average
Exercise Price
|
||||||
Options outstanding at
December 31, 2007
|
8,997,366
|
$
|
3.72
|
||||
Options
granted
|
2,265,500
|
$
|
3.25
|
||||
Options
exercised
|
(431,974
|
)
|
$
|
1.52
|
|||
Options
cancelled
|
(690,908
|
)
|
$
|
4.79
|
|||
Options
outstanding at September 30, 2008
|
10,139,984
|
$
|
3.63
|
||||
Options
exercisable at September 30, 2008
|
5,587,263
|
$
|
3.05
|
Shares
|
Weighted
Average Grant-
Date Fair Value
|
||||||
Nonvested
Shares at December 31, 2007
|
4,349,083
|
$
|
3.18
|
||||
Granted
|
2,265,500
|
$
|
1.93
|
||||
Vested
|
(1,465,621
|
)
|
$
|
2.93
|
|||
Cancelled
|
(596,241
|
)
|
$
|
2.88
|
|||
Nonvested
Shares at September 30, 2008
|
4,552,721
|
$
|
2.79
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Basic
|
47,229,252
|
43,080,475
|
47,433,924
|
42,469,631
|
|||||||||
Effect
of assumed exercised options and warrants
|
1,448,764
|
3,248,401
|
1,630,227
|
3,472,805
|
|||||||||
Diluted
|
48,678,016
|
46,328,876
|
49,064,151
|
45,942,436
|
Consolidated
|
Corporate
|
Business
|
Consumer
|
||||||||||
Revenue:
|
|||||||||||||
Hosted
services
|
$
|
15,769
|
$
|
—
|
$
|
15,769
|
$
|
—
|
|||||
Expert
advice
|
2,647
|
—
|
—
|
2,647
|
|||||||||
Professional
services
|
959
|
—
|
959
|
—
|
|||||||||
Total
revenue
|
$
|
19,375
|
$
|
—
|
$
|
16,728
|
$
|
2,647
|
|||||
Cost
of revenue
|
5,226
|
—
|
4,268
|
958
|
|||||||||
Sales
and marketing
|
6,624
|
—
|
4,572
|
2,052
|
|||||||||
Amortization
of intangibles
|
352
|
—
|
202
|
150
|
|||||||||
Unallocated
corporate expenses
|
6,698
|
6,698
|
—
|
—
|
|||||||||
Operating
income (loss)
|
$
|
475
|
$
|
(6,698
|
)
|
$
|
7,686
|
$
|
(513
|
)
|
United
States
|
$
|
14,888
|
||
United
Kingdom
|
2,250
|
|||
Other
countries
|
2,237
|
|||
Total
revenue
|
$
|
19,375
|
Consolidated
|
Corporate
|
Business
|
Consumer
|
||||||||||
Revenue:
|
|||||||||||||
Hosted
services
|
$
|
44,257
|
$
|
—
|
$
|
44,257
|
$
|
—
|
|||||
Expert
advice
|
8,132
|
—
|
—
|
8,132
|
|||||||||
Professional
services
|
2,659
|
—
|
2,659
|
—
|
|||||||||
Total
revenue
|
$
|
55,048
|
$
|
—
|
$
|
46,916
|
$
|
8,132
|
|||||
Cost
of revenue
|
15,346
|
—
|
12,520
|
2,826
|
|||||||||
Sales
and marketing
|
18,864
|
—
|
13,356
|
5,508
|
|||||||||
Amortization
of intangibles
|
1,134
|
—
|
686
|
448
|
|||||||||
Unallocated
corporate expenses
|
19,910
|
19,910
|
—
|
—
|
|||||||||
Operating
(loss) income
|
$
|
(206
|
)
|
$
|
(19,910
|
)
|
$
|
20,354
|
$
|
(650
|
)
|
United
States
|
$
|
42,599
|
||
United
Kingdom
|
6,135
|
|||
Other
countries
|
6,314
|
|||
Total
revenue
|
$
|
55,048
|
United
States
|
$
|
28,741
|
||
Israel
|
39,988
|
|||
Total
long-lived assets
|
$
|
68,729
|
Total
|
Business
|
Consumer
|
||||||||
Balance
as of December 31, 2007
|
$
|
51,684
|
$
|
18,744
|
$
|
32,940
|
||||
Adjustments
to goodwill:
|
||||||||||
Release
of valuation reserve on deferred tax asset (see Note 3)
|
(3,873
|
)
|
(3,031
|
)
|
(842
|
)
|
||||
Contingent
earnout payments
|
147
|
147
|
-
|
|||||||
Other
|
13
|
6
|
7
|
|||||||
Balance
as of September 30, 2008
|
$
|
47,971
|
$
|
15,866
|
$
|
32,105
|
As
of September 30, 2008
|
||||||||||
Gross
Carrying
Amount
|
Weighted
Average
Amortization
Period
|
Accumulated
Amortization
|
||||||||
Amortizing
intangible assets:
|
||||||||||
Technology
|
$
|
4,910
|
4.0
years
|
$
|
1,228
|
|||||
Customer
contracts/customer lists
|
2,400
|
3.0
years
|
1,761
|
|||||||
Trade
names
|
630
|
3.0
years
|
210
|
|||||||
Other
|
235
|
3.0
years
|
78
|
|||||||
Total
|
$
|
8,175
|
$
|
3,277
|
September 30, 2008
|
December 31, 2007
|
||||||
Computer
equipment and software
|
$
|
10,970
|
$
|
6,033
|
|||
Furniture,
equipment and building improvements
|
681
|
565
|
|||||
11,651
|
6,598
|
||||||
Less
accumulated depreciation
|
4,189
|
2,865
|
|||||
Total
|
$
|
7,462
|
$
|
3,733
|
September 30, 2008
|
December 31, 2007
|
||||||
Payroll
and other employee related costs
|
$
|
5,315
|
$
|
4,790
|
|||
Professional
services and consulting and other vendor fees
|
2,178
|
3,856
|
|||||
Sales
commissions
|
313
|
286
|
|||||
Restructuring
(see Note 3)
|
-
|
49
|
|||||
Other
|
560
|
210
|
|||||
Total
|
$
|
8,366
|
$
|
9,191
|
Balance as of
January 1, 2008
|
Provision for the
nine months ended
September 30, 2008
|
Net utilization
during the nine
months ended
September 30, 2008
|
Balance as of
September 30, 2008
|
||||||||||
Contract
terminations
|
$
|
49
|
$
|
—
|
$
|
(49
|
)
|
$
|
-
|
||||
Total
|
$
|
49
|
$
|
—
|
$
|
(49
|
)
|
$
|
-
|
· |
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
consumer
and SMB services.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Stock-based
compensation expense related to SFAS No. 123(R)
|
$
|
1,014
|
$
|
930
|
$
|
3,178
|
$
|
2,642
|
|||||
Total
|
$
|
1,014
|
$
|
930
|
$
|
3,178
|
$
|
2,642
|
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
|
$
|
8,018
|
$
|
3,879
|
$
|
4,066
|
$
|
73
|
$
|
—
|
||||||
Total
|
$
|
8,018
|
$
|
3,879
|
$
|
4,066
|
$
|
73
|
$
|
—
|
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 |
|||||||||
7/1/2008
– 7/31/2008
|
—
|
$
|
—
|
—
|
$
|
4,363,000
|
|||||||
8/1/2008
– 8/31/2008
|
—
|
$
|
—
|
—
|
$
|
4,363,000
|
|||||||
9/1/2008
– 9/30/2008
|
—
|
$
|
—
|
—
|
$
|
4,363,000
|
|||||||
Total
|
—
|
$
|
—
|
—
|
$
|
4,363,000
|
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:
November 7, 2008
|
By:
|
/s/
ROBERT P. LOCASCIO
|
Name:
|
Robert
P. LoCascio
|
|
Title:
|
Chief
Executive Officer (duly authorized officer)
|
|
Date:
November 7, 2008
|
By:
|
/s/
TIMOTHY E. BIXBY
|
Name:
|
Timothy
E. Bixby
|
|
Title:
|
President
and Chief Financial Officer (principal
financial and accounting officer) |
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
|