LivePerson Reports Record Revenue

Q4 Revenue Increases 33% Vs. Prior Year

NEW YORK, NY - February 6, 2003 - LivePerson, Inc. (NASDAQ: LPSN), a provider of technology facilitating real-time online customer interaction, today announced financial results for the quarter and year ended December 31, 2002.

Revenue for the three months ended December 31, 2002 was $2.4 million, a 10% increase from $2.2 million in the third quarter, and up 33% versus the prior year period. Revenue for the year was $8.2 million, up 5% from the prior year.

"We are pleased with the top line progress in the fourth quarter," CEO Robert LoCascio stated. "We delivered 10% sequential quarterly growth, which was twice our expectations of 5%. We have now seen three consecutive quarters of accelerating revenue growth. Given our increasing visibility, I am confident that we are in a strong position to deliver our revenue guidance for 2003 of at least $11 million, and EBITDA margins of 15%."

LivePerson's growth in the quarter was driven by increasing business with existing clients Bell Canada, eBay, Maersk Shipping and Microsoft, as well as new client wins Dow Corning and eLuxury. The successful completion of the integration of clients acquired through the NewChannel transaction announced in July 2002 also contributed to revenue growth, as the fourth quarter was the first full quarter post-integration. The Company expects full payback on the NewChannel investment within the first ten months, or 15% faster than original expectations.

Net loss for the quarter was $(1.3) million or $(0.04) per share, as compared to a net loss of $(28,000) or $(0.00) per share in the prior quarter, and net loss of $(1.2) million, or $(0.03) per share in the fourth quarter of 2001. The Company incurred an additional restructuring charge of $1.2 million in the quarter due primarily to the settlement of a previously disclosed hardware vendor lawsuit related to our 2001 restructuring initiatives. Net loss for the quarter excluding this charge was $(60,000).

Net loss for the year was $(6.8) million as compared to $(27.3) million in the prior year. Net loss for the year 2002 included, in addition to the restructuring charge, a non-cash expense related to the cumulative effect of an accounting change of $5.3 million. Net loss for the prior year included a net restructuring charge of $11.0 million. Excluding these charges, net loss for the year 2002 was $(247,000) as compared to $(16.2) million in the prior year.

Earnings/(loss) before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter was $(0.8) million, as compared to $0.2 million in the third quarter, and versus $(0.3) million in the fourth quarter of 2001. Excluding the restructuring charge, EBITDA in the fourth quarter was $0.3 million.

EBITDA for the year was $(0.5) million as compared to $(23.6) million in the prior year. Excluding the net restructuring charges of $1.2 million and $11.0 million, respectively, EBITDA for the year was $0.7 million as compared to $(12.6) million in the prior year.

Cash balance was $8.0 million at year-end as compared to $10 million in the prior quarter. Cash outlays for the legal settlement referred to above ($2.0 million) and a progress payment related to the NewChannel transaction ($0.5 million) were offset by positive cash from operations of approximately $0.5 million.

  Financial Expectations
  The Company currently expects the following financial results in 2003:
    * Sequential quarterly revenue growth of 5%, or $2.5 million in Q1 2003
    * Annual revenue growth of 35% or better, to $11 million for the full
       year 2003
    * EBITDA margins of 15% for both Q1 2003 and the full year 2003
    * EBITDA of $0.4 million in Q1 2003 and $1.6 million for the full year
       2003

  Customers Drive Growth

Over the past year, global brands such as eBay, EarthLink, Ameritrade, Kinkos, Microsoft, AT&T and Computer Associates have expanded their use of LivePerson as they realize tremendous benefits from using real-time communications for online sales, support and marketing. One of the major benefits of live chat for customer support is decreased support costs and increased efficiency. Prudential noted in an eWeek article recently that while the average help desk problem resolved over the phone costs about $16 per call, a real-time chat session costs about $3.50 to resolve similar issues. They are also able to solve 95% of inquiries to the help desk through LivePerson. Clients that use LivePerson to facilitate sales and lead generation online note significant improvement in sales conversion rates.

Product Innovation and Expansion

Throughout 2002, LivePerson continued to invest in research and development. In September 2002, we launched LivePerson Sales Edition, a complementary product to our flagship click-to-chat application, LivePerson Service Edition. This application brings immediate ROI to companies such as Computer Associates, AT&T, Bell South and Microsoft that use their Web site to generate sales or leads. By tracking a visitor's activity on a Web site, companies are able to proactively engage only the most likely buyers into an online sales consultation.

About LivePerson

LivePerson is a leading provider of technology facilitating real-time online customer interaction. LivePerson services enable online businesses to communicate securely with Internet users in real time, thereby enhancing the online experience. With real-time solutions consisting of chat, real-time marketing and selling tools, a self-service FAQ product and email management, LivePerson offers clients the opportunity to increase sales, lower customer service costs and increase responsiveness to customer needs. LivePerson is headquartered in New York City.

               Condensed Consolidated Statements of Operations
               (In Thousands, Except Share and Per Share Data)

                                Three Months Ended            Year Ended
                                    December 31,              December 31,
                                    (Unaudited)
                                   2002        2001        2002        2001
  Total revenues                 $2,374      $1,789      $8,234      $7,806

  Operating expenses:
    Cost of revenues                467         328       1,604       6,740
    Product development             403         509       1,283       3,509
    Sales and marketing             519         662       2,177       5,089
    General and
     administrative                 731         662       2,811       5,694
    Amortization of goodwill
     and other intangibles          232         745         357       2,975
    Non-cash compensation,
     net of reversals               100         108         365         677
    Non-cash compensation
     credit related to
     restructuring, net              --          --          --      (1,720)
    Restructuring charges         1,186          --       1,186      12,740
       Total operating
        expenses                  3,638       3,014       9,783      35,704

  Loss from operations           (1,264)     (1,225)     (1,549)    (27,898)

  Other income, net                  18          58         116         637

  Loss before cumulative
   effect of accounting
   change                        (1,246)     (1,167)     (1,433)    (27,261)
  Cumulative effect of
   accounting change                 --          --      (5,338)         --

  Net loss                      $(1,246)    $(1,167)    $(6,771)   $(27,261)

  Basic and diluted net loss
   per share:
    Loss before cumulative
     effect of accounting
     change                      $(0.04)     $(0.03)     $(0.04)     $(0.80)

    Cumulative effect of
     accounting change               --          --       (0.16)         --

    Net loss                     $(0.04)     $(0.03)     $(0.20)     $(0.80)

  Weighted average shares
   outstanding used in basic
   and diluted net loss
   per share calculation     34,058,569  34,003,610  34,028,702  33,987,895


  Unaudited Supplemental Data

      The following information is not a financial measure under generally
  accepted accounting principles. In addition, it should not be construed as
  an alternative to any other measures of performance determined in
  accordance with generally accepted accounting principles, 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 this
  type of information 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.


  Net loss in accordance
   with generally accepted
   accounting principles        $(1,246)    $(1,167)    $(6,771)   $(27,261)
  Add/(Less)
    (a) Amortization of
         goodwill and other
         intangibles                232         745         357       2,975
    (b) Non-cash compensation,
         net of reversals           100         108         365         677
    (c) Non-cash compensation
         credit related to
         restructuring, net          --          --          --      (1,720)
    (d) Depreciation                 93          89         367       2,348

    (e) Cumulative effect of
         accounting change           --          --       5,338          --
    (f) Interest income, net        (18)        (58)       (116)       (637)

  EBITDA (1)                      $(839)      $(283)      $(460)   $(23,618)

  (1) Earnings before interest, taxes, depreciation and amortization.


  EBITDA Financial Disclosure:

                               LivePerson, Inc.
                    Condensed Consolidated Balance Sheets
               (In Thousands, Except Share and Per Share Data)



                                               December 31,     December 31,
                                                   2002             2001
      ASSETS

  Current assets:
    Cash, cash equivalents and
     marketable securities                        $8,004            $10,136
    Accounts receivable, net                         607                620
    Prepaid expenses and other current
     assets                                          299                389
      Total current assets                         8,910             11,145

    Property and equipment, net                      595                915
    Goodwill and other intangibles,
     net                                           1,014              5,338
    Security deposits                                124                122
    Other assets                                     194                107
      Total assets                               $10,837            $17,627

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
    Accounts payable                                $136               $592
    Accrued expenses                               1,837              2,115
    Deferred revenue                                 800                560
      Total current liabilities                    2,773              3,267

  Other liabilities                                  176                 89

  Commitments and contingencies

  Total stockholders' equity                       7,888             14,271
          Total liabilities and
           stockholders' equity                  $10,837            $17,627


      Investors are cautioned that the EBITDA, or earnings/(loss) before
  interest, taxes, depreciation and amortization, information contained in
  this press release is not a financial measure under generally accepted
  accounting principles. In addition, it should not be construed as an
  alternative to any other measures of performance determined in accordance
  with generally accepted accounting principles, 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
  such as EBITDA, by its very 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.

  Forward Looking Statements:

Statements in this press release regarding LivePerson, Inc. that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results. 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 progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change prior to the end of the quarter. Although these expectations may change, we are under no obligation to inform you if they do. Our company policy is generally to provide our expectations only once per quarter, and not to update that information until the next quarter. Actual events or results may differ materially from those contained in the projections or forward-looking statements. The following factors, among others, could cause LivePerson's actual results to differ materially from those described in a forward-looking statement: the limited history of providing the LivePerson services; our limited historical annual revenue and history of losses; the possible unavailability of financing as and if needed; an unproven business model; our dependence on the success of the LivePerson chat service; continued use by our clients of the LivePerson services; potential fluctuations in our quarterly and annual results; risks related to adverse business conditions experienced by our clients; our dependence on key employees; risks related to our international operation, particularly our operations in Tel Aviv, Israel, and the current civil and political unrest in that region; competition both for qualified personnel and in the market for real-time sales and customer service technology; building awareness of the LivePerson brand name; technology systems beyond LivePerson's control and technology-related defects that could disrupt the LivePerson services; our dependence on the growth of the Internet as a medium for commerce and the viability of the infrastructure of the Internet; and responding to rapid technological change. 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 LivePerson 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.

  Media Contacts:
  Jennifer Regnault               Jane Hynes
  LivePerson, Inc.                OutCast Communications
  (212) 609-4213                  (415) 392-8282
  jregnault@liveperson.com        jane@outcastpr.com

SOURCE: LivePerson, Inc.

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

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