LivePerson Reports Second Quarter 2008 Financial Results

Quarterly revenue increases 59% from prior year, and 9% from prior quarter

Continued growth in UK-based clients leads enterprise revenue gains

Business segment revenue grows 35% from prior year, and 10% from prior quarter

Consumer segment (formerly Kasamba) revenue grows 4% from prior quarter

GAAP EPS is breakeven for second quarter

Adjusted EPS and EBITDA per share are both $0.04 for second quarter

NEW YORK

NEW YORK, NY - August 6, 2008 - LivePerson, Inc. (NASDAQ: LPSN), a provider of online engagement solutions that facilitate real-time assistance and expert advice, today announced financial results for the second quarter ended June 30, 2008.

Revenue

Revenue for the second quarter was $18.6 million, a 59% increase from the second quarter of 2007, and a 9% sequential increase as compared to the first quarter of 2008. Excluding the impact of the acquisition of Kasamba, Inc., revenue for the second quarter was $15.8 million, a 35% increase from the second quarter of 2007, and a 10% sequential increase as compared to the preceding quarter.

Sequential revenue growth was due to strong demand and growth from enterprise customers in the United Kingdom, the continued adoption of LivePerson's proactive chat solution by clients in the global high-tech sector and continued healthy performance of the small business product line.

"We were very pleased with the results in the second quarter," CEO Robert LoCascio said. "Our revenue growth exceeded our internal expectations, with all three primary growth drivers performing well. Our consumer revenue growth was in line with our expectations, while our enterprise and small business revenue combined delivered 10% quarterly sequential revenue growth."

  Client and Partner Expansion
  LivePerson added several new clients in the US, including:
  -- Sun Microsystems
  -- Nestle USA
  -- Cricket Communications, a subsidiary of Leap Wireless

The company also signed new clients and expanded business with customers in the UK, including:

  -- Harrods, one of the world's most famous department stores
  -- Boots, the UK's leading pharmacy-led health and beauty retailer
  -- One of Europe's leading credit card providers

In addition, a leading global provider of systems, software and services entered into a company-wide agreement establishing LivePerson as its preferred technology platform for live chat and voice solutions.

Net Income and Loss

Net loss for the second quarter of 2008 was $0.2 million or $0.00 per share as compared to net income of $0.9 million or $0.02 per share in the second quarter of 2007, and a net loss of $0.2 million or $0.00 per share in the first quarter of 2008.

Adjusted Net Income and EBITDA

LivePerson considers adjusted net income and earnings before interest, taxes, depreciation and amortization (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 (GAAP), but should not be considered as a substitute for, or superior to, GAAP results.

A reconciliation of the differences between 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.

The difference between EBITDA per share, a non-GAAP measure, and GAAP EPS, is interest, taxes, depreciation, amortization and stock-based compensation. The difference between adjusted net income per share and GAAP EPS is amortization of intangible assets and stock-based compensation.

Adjusted net income for the second quarter of 2008 was $1.7 million or $0.04 per share, as compared to $2.1 million or $0.05 per share in the comparable period in 2007, and $1.4 million or $0.03 per share in the first quarter of 2008.

EBITDA for the second quarter of 2008 was $1.9 million or $0.04 per share, as compared to $2.2 million or $0.05 per share in the second quarter of 2007, and $1.7 million or $0.03 per share in the first quarter of 2008.

Cash

The company's cash balance grew to $23.5 million at June 30, 2008 as compared to $21.5 million as of March 31, 2008. The company generated approximately $4.0 million from operations. Also during the second quarter, the company repurchased stock resulting in a cash outlay of approximately $1.6 million, and purchased computer hardware related primarily to its colocation facility resulting in a cash outlay of approximately $0.5 million.

  Financial Expectations

  Third Quarter 2008
  -- Revenue of $19.0 -- $20.0 million
  -- EBITDA of $0.04 -- $0.05 per share
  -- Adjusted net income of $0.03 -- $0.04 per share
  -- GAAP EPS of $0.00 -- $0.01
  -- Fully diluted share count of approximately 50 million


  Full Year 2008
  -- Revenue of $75.5 -- $77.0 million
  -- EBITDA of $0.19 -- $0.21 per share
  -- Adjusted net income of $0.14 -- $0.16 per share
  -- GAAP EPS of $0.00 -- $0.01
  -- Fully diluted share count of approximately 50 million
  -- Estimated full year cash income taxes of approximately $0.5 million


  Stock-Based Compensation

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

                                  Q2 2008
  Cost of revenue                  $161
  Product development               422
  Sales and marketing               300
  General and administrative        321
     Total                       $1,204


  Amortization of Intangible Assets

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

                                  Q2 2008
  Cost of revenue                  $307
  General and administrative        391
     Total                         $698



                             LivePerson, Inc.
             Condensed Consolidated Statements of Operations
             (In Thousands, Except Share and Per Share Data)
                                Unaudited

                                 Three Months Ended       Six Months Ended
                                      June 30,                June 30,
                                  2008        2007        2008        2007
  Total revenue                 $18,588     $11,661     $35,673     $22,630

  Operating expenses:
    Cost of revenue               5,234       3,105      10,120       5,894
    Product development           3,503       2,044       6,577       3,864
    Sales and marketing           6,443       3,512      12,241       6,914
    General and administrative    3,455       2,057       6,635       4,079
    Amortization of other
     intangibles                    391         242         782         483
       Total operating expenses  19,026      10,960      36,355      21,234

  (Loss) income from operations    (438)        701        (682)      1,396

  Other income, net                 108         212         189         435

  (Loss) income before
   benefit from income taxes       (330)        913        (493)      1,831

  Benefit from income taxes        (139)          -         (90)          -

  Net (loss) income               $(191)       $913       $(403)     $1,831

  Basic net (loss) income
   per common share              $(0.00)      $0.02      $(0.01)      $0.04

  Diluted net (loss) income
   per common share              $(0.00)      $0.02      $(0.01)      $0.04

  Weighted average shares
   outstanding used in basic
   net (loss) income per
   common share calculation  47,182,068  43,011,309  47,537,385  42,159,146

  Weighted average shares
   outstanding used in
   diluted net (loss) income
   per common share
   calculation               47,182,068  46,726,357  47,537,385  45,757,843



                             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       Six Months Ended
                                       June 30,                June 30,
                                   2008        2007        2008        2007
  Net (loss) income in
    accordance with generally
    accepted accounting
    principles                    $(191)       $913       $(403)     $1,831
    Add/(less):
    (a) Amortization of
         intangibles                698         325       1,396         650
    (b) Stock-based
         compensation             1,204         898       2,164       1,712
    (c) Depreciation                475         229         798         438
    (d) Benefit from income
         taxes                     (139)          -         (90)          -
    (e) Interest income, net       (108)       (212)       (189)       (435)
  EBITDA (1)                     $1,939      $2,153      $3,676      $4,196
  Diluted EBITDA per common
   share                          $0.04       $0.05       $0.07       $0.09

  Weighted average shares
   used in diluted EBITDA per
   common share              48,732,780  46,726,357  49,260,216  45,757,843


  Net (loss) income in
   accordance with generally
   accepted accounting
   principles                     $(191)       $913       $(403)     $1,831
    Add:
    (a) Amortization of
         intangibles                698         325       1,396         650
    (b) Stock-based
         compensation             1,204         898       2,164       1,712
  Adjusted net income            $1,711      $2,136      $3,157      $4,193
  Diluted adjusted net income
   per common share               $0.04       $0.05       $0.06       $0.09

  Weighted average shares
   used in diluted adjusted
   net income per common
   share                     48,732,780  46,726,357  49,260,216  45,757,843


  EBITDA                         $1,939      $2,153      $3,676      $4,196
    Add/(less):
    (a) Changes in operating
         assets and
         liabilities              1,983         191        (168)       (386)
    (b) Provision for
          doubtful accounts           -           -          68          20
    (c) Benefit from income taxes   139           -          90           -
    (d) Deferred income taxes      (167)     (1,054)       (251)     (2,084)
    (e) Interest income, net        108         212         189         435
  Net cash provided by
   operating activities          $4,002      $1,502      $3,604      $2,181

  (1)  Earnings before interest, taxes, depreciation, amortization and
       stock-based compensation.



                             LivePerson, Inc.
                  Condensed Consolidated Balance Sheets
                              (In Thousands)
                                Unaudited

                                              June 30, 2008    Dec. 31, 2007
  ASSETS

  Current assets:
    Cash and cash equivalents                    $23,450            $26,222
    Accounts receivable, net                       6,665              6,026
    Prepaid expenses and other current assets      2,167              1,802
    Deferred tax assets, net                       2,302                 42
      Total current assets                        34,584             34,092

    Property and equipment, net                    6,064              3,733
    Intangibles, net                               5,557              6,953
    Goodwill                                      48,775             51,684
    Deferred tax assets, net                       4,838              4,202
    Security deposits                                348                499
    Other assets                                   1,615              1,325
      Total assets                              $101,781           $102,488

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
    Accounts payable                              $4,990             $3,067
    Accrued expenses                               7,206              9,191
    Deferred revenue                               4,865              4,000
    Deferred tax liabilities, net                      -                193
      Total current liabilities                   17,061             16,451

  Other liabilities                                1,615              1,325

  Commitments and contingencies

  Total stockholders' equity                      83,105             84,712
          Total liabilities and stockholders'
           equity                               $101,781           $102,488


  About LivePerson

LivePerson is a provider of online engagement solutions that facilitate real-time assistance and expert advice. Connecting businesses and experts with consumers seeking help on the Web, LivePerson's hosted software platform creates more relevant, compelling and personalized online experiences. Every month, LivePerson's intelligent platform helps millions of people succeed online; more than 6,000 companies, including EarthLink, Hewlett-Packard, Microsoft, Qwest, and Verizon, rely on LivePerson to maximize the impact of the online channel. LivePerson is headquartered in New York City.

Non-GAAP Financial Disclosure

Investors are cautioned that the EBITDA, or earnings before interest, taxes, depreciation, amortization and stock-based compensation, and adjusted net income, or net income excluding amortization of intangible assets and stock-based compensation, information contained in this press release are not financial measures under generally accepted accounting principles. In addition, 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 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 progresses, 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: risks related to the operational integration of acquisitions; risks related to our increased operations in the direct-to-consumer market; risks related to our international operations, particularly our operations in Israel, and the civil and political unrest in that region; volatility of the value of certain currencies in relation to the US dollar, particularly the New Israeli Shekel, U.K. pound and Euro; our history of losses; potential fluctuations in our quarterly and annual results; impairments to goodwill that result in significant charges to earnings; responding to rapid technological change and changing client preferences; competition in the real-time sales, marketing, customer service and online engagement solutions market; continued use by our clients of the LivePerson services and their purchase of additional services; technology systems beyond our control and technology-related defects that could disrupt the LivePerson services; risks related to adverse business conditions experienced by our clients; our dependence on key employees; competition for qualified personnel; the impact of new accounting rules, including the requirement to expense stock options; the possible unavailability of financing as and if needed; risks related to protecting our intellectual property rights or potential infringement of the intellectual property rights of third parties; our dependence on the continued use of the Internet as a medium for commerce and the viability of the infrastructure of the Internet; and risks related to the regulation or possible misappropriation of personal information. 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.

SOURCE: LivePerson, Inc.

CONTACT: Younjee Kim, +1-212-609-4222, ykim@liveperson.com

Web site: http://www.liveperson.com/