LivePerson Third Quarter Revenue Increases 39% From Prior Year

NEW YORK, NY - October 28, 2004 - LivePerson, Inc. (NASDAQ: LPSN), a leading provider of software solutions for online communications including sales, marketing and customer service, today announced financial results for the third quarter ended September 30, 2004.

Revenue for the third quarter was $4.4 million, a 39% increase from the third quarter of 2003, and a 1% sequential increase versus the second quarter of 2004. Revenue growth versus the prior year was due primarily to existing client growth, the addition of new clients and to a lesser extent, the Island Data acquisition effective January 1, 2004.

"The announcement of LivePerson Timpani, our hosted, multichannel platform for online communication, was the highlight of the third quarter," CEO Robert LoCascio stated. "Though sequential sales growth in the quarter was less than we had expected, we expect greater sequential growth in the fourth quarter based on our current sales pipeline activity."

The launch of Timpani establishes LivePerson as a provider of a fully integrated, multichannel communication solution for online businesses. Integrating chat, email and a self-service knowledgebase, Timpani provides an easy to implement hosted solution for businesses of all sizes that wish to communicate effectively with their online customers from a single customer contact database. Timpani's integration of each online communication channel ensures that website visitors can access the right channel at the right time, thereby minimizing cost and increasing online sales.

Net income for the third quarter of 2004 was $0.6 million or $0.02 per share, as compared to net income of $0.7 million or $0.02 per share in the second quarter of 2004, and net income of $9,000, or $0.00 per share in the third quarter of 2003.

Earnings before interest, taxes, depreciation, amortization and non-cash compensation (EBITDA) for the third quarter of 2004 was $1.0 million versus $1.0 million in the second quarter of 2004 and $0.5 million in the third quarter of 2003.

A reconciliation of the differences between EBITDA and the most comparable financial measure calculated and presented in accordance with generally accepted accounting principles (GAAP) is located under the heading "Reconciliation of Non-GAAP Financial Information to GAAP" immediately following the Condensed Consolidated Statements of Operations included in this press release.

LivePerson considers EBITDA and cash from operations to be important financial indicators of the Company's operational strength and the performance of its business. EBITDA should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure.

  Financial Expectations

  The Company currently expects the following financial results:
    * Sequential quarterly revenue growth of 3%, to $4.5 million for Q4 2004
    * Revenue of $17.3 million for the full year 2004
    * EBITDA of $0.02 per share and GAAP EPS of $0.01 in Q4 2004
    * EBITDA of $0.10 per share and GAAP EPS of $0.07 for the full year 2004

The difference between EBITDA per share, a non-GAAP measure, and GAAP EPS, is interest, taxes, depreciation, amortization and non-cash compensation and is expected to be $0.01 per share in Q4 and $0.03 per share for the full year 2004.

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

                                 Three Months Ended      Nine Months Ended
                                    September 30,           September 30,
                                     (Unaudited)            (Unaudited)
                                  2004        2003        2004        2003

  Total revenue                  $4,381      $3,142     $12,796      $8,497

  Operating expenses:
    Cost of revenue                 730         501       2,116       1,508
    Product development             515         419       1,470       1,170
    Sales and marketing           1,327         910       3,721       2,494
    General and administrative      972       1,059       2,881       2,655
    Amortization of
     other intangibles              204         253         563         760
    Restructuring charge             --          --          --       1,024
       Total operating expenses   3,748       3,142      10,751       9,611

  Income (loss) from
   operations                       633           0       2,045      (1,114)

  Other income, net                  18           9          41          20

  Income (loss) before
   provision for income taxes       651           9       2,086      (1,094)

  Provision for income taxes         25          --          58          --

  Net income (loss)                $626          $9      $2,028     $(1,094)

  Basic net income
   (loss) per share               $0.02       $0.00       $0.05      $(0.03)

  Diluted net income
   (loss) per share               $0.02       $0.00       $0.05      $(0.03)

  Weighted average shares
   outstanding used in basic
   net income (loss) per
   share calculation         37,336,792  34,887,114  37,222,428  34,426,751

  Weighted average shares
   outstanding used in
   diluted net income (loss)
   per share calculation     37,336,792  35,668,024  37,770,159  34,426,751



                             LivePerson, Inc.
         Reconciliation of Non-GAAP Financial Information to GAAP
             (In Thousands, Except Share and Per Share Data)

  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      Nine Months Ended
                                    September 30,           September 30,
                                     (Unaudited)             (Unaudited)
                                  2004        2003        2004        2003
  Net income (loss) in
   accordance with generally
   accepted accounting principles  $626          $9      $2,028     $(1,094)
    Add/(less):
    (a) Amortization of
         other intangibles          204         253         563         760
    (b) Non-cash compensation        58         143         187         191
    (c) Depreciation                 56          71         172         279
    (d) Provision for
         income taxes                25          --          58          --
    (e) Interest income, net        (18)         (9)        (41)        (27)
  EBITDA (1)                       $951        $467      $2,967        $109
  Fully diluted
   EBITDA per share               $0.03       $0.01       $0.08       $0.00

  Weighted average shares
   used in EBITDA per share
   calculation
    Fully diluted (2)        37,336,792  35,668,024  37,770,159  35,075,793

  EBITDA                           $951        $467      $2,967        $109
    Add/(less):
    Changes in operating
     assets and liabilities         131        (252)     (1,173)        771
    Provision for doubtful
     accounts                        --          --          15          15
    Provision for income taxes      (25)         --         (58)         --
    Interest income, net             18           9          41          27
  Net cash provided by
   operating activities          $1,075        $224      $1,792        $922

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

  (2) The weighted average shares assumed to be outstanding under the EBITDA
      per share calculation is greater for certain periods as compared to
      the weighted average shares assumed to be outstanding in accordance
      with GAAP. This occurs when both a GAAP net loss and positive EBITDA
      per share exist in a given period.


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

                                       September 30, 2004  December 31, 2003
                                           (unaudited)
  ASSETS

  Current assets:
    Cash and cash equivalents                 $12,287            $10,898
    Accounts receivable, net                    1,088              1,239
    Prepaid expenses and other current assets     518                318
      Total current assets                     13,893             12,455

    Property and equipment, net                   462                341
    Other intangibles, net                      1,950                361
    Security deposits                             137                129
    Other assets                                  312                251
      Total assets                            $16,754            $13,537

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
    Accounts payable                             $284               $116
    Accrued expenses                            1,707              2,577
    Deferred revenue                            1,054              1,276
      Total current liabilities                 3,045              3,969

  Other liabilities                               312                232

  Commitments and contingencies

  Total stockholders' equity                   13,397              9,336
          Total liabilities and
           stockholders' equity               $16,754            $13,537

  About LivePerson

LivePerson is a leading provider of software solutions for online communications including sales, marketing and customer service. LivePerson's Timpani platform enables online businesses to identify and engage the right customer with the right communication channel at the right time, thereby enhancing the online experience. Chat, marketing and selling tools, a self- service knowledgebase and email management are combined with industry-leading channel matching technology, rules-based intelligence, routing and reporting, to offer clients the opportunity to increase sales, lower customer service costs and enhance the customer experience. Many among the company's roster of more than 3,000 customers, including EarthLink, Microsoft, Hewlett Packard, Qwest, Verizon and AT&T, have reported significant savings, increased sales and high customer satisfaction using LivePerson's technologies. LivePerson is headquartered in New York City.

EBITDA Financial Disclosure

Investors are cautioned that the EBITDA, or earnings before interest, taxes, depreciation, amortization and non-cash compensation, 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 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.

Forward Looking Statements

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 progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our 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 our actual results to differ materially from those described in a forward-looking statement: our history of losses; potential fluctuations in our quarterly and annual results; responding to rapid technological change and changing client preferences; competition in the real- time sales, marketing and customer service 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 possible unavailability of financing as and if needed; risks related to the operational integration of acquisitions; risks related to our international operations, particularly our operations in Israel, and the current civil and political unrest in that region; 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/