LivePerson Reports Record Revenue of $52.2 Million, Up 56% from Prior Year and Fourth Quarter Revenue Increase of 62% to $16.8 Million

Significant expansion in Western Europe highlights enterprise sales in quarter

Expansion in largest enterprise accounts continues to strengthen

Acquisition of Kasamba, Inc. closed on October 3, 2007

Quarterly sequential revenue growth is 9%, excluding Kasamba impact

EPS in fourth quarter is $0.05, full year is $0.12

EBITDA per share in fourth quarter is $0.06, full year is $0.21

NEW YORK, NY - February, 13, 2008 - LivePerson, Inc. (NASDAQ: LPSN), a provider of online engagement solutions that facilitate real-time assistance and trusted expert advice, today announced financial results for the fourth quarter and full year ended December 31, 2007.

Revenue

Revenue for the fourth quarter was $16.8 million, a 62% increase from the fourth quarter of 2006, and a 31% sequential increase versus the third quarter of 2007. Excluding the impact of the acquisition of Kasamba, Inc., revenue for the fourth quarter was $13.9 million, a 35% increase from the fourth quarter of 2006, and a 9% sequential increase versus the third quarter of 2007. The Kasamba transaction closed on October 3, 2007.

Revenue for the full year 2007 was $52.2 million, a 56% increase from $33.5 million in the prior year. Revenue growth was due primarily to expansion of existing deployments of Timpani™ Sales & Marketing, continuing strong sales to small and mid-size business customers, as well as the impact of the Kasamba acquisition. Excluding the impact of Kasamba, revenue for the year was $49.4 million, representing a 47% annual increase.

"The fourth quarter was a very strong finish for us," CEO Robert LoCascio said. "It capped a terrific year where we delivered 56% revenue growth and expanded operating margins, while strongly positioning ourselves to expand into the consumer market with the acquisition of Kasamba, Inc."

Client Expansion

Strengthening its international presence, LivePerson generated new business and expanded existing implementations with leading companies in Western Europe including:

  -- COFIDIS, France's leader in "distance" consumer credit
  -- British Sky Broadcasting (Sky), a provider of pay TV, broadband and
     telephony services
  -- Lloyds TSB, a leading UK-based financial services group
  -- HBOS, the UK's largest mortgage and savings provider
  -- BT, one of the world's leading providers of communications solutions
     and services

The company also expanded US and international business with several existing US-based customers including:

  -- Saturn, a leading North American automaker
  -- Orbitz, a leading online travel company
  -- Cisco Systems, the worldwide leader in networking for the Internet
  -- An industry leader in personal computers and digital media
  -- A global provider of the world's leading systems, software and services


  Net Income

Net income for the fourth quarter of 2007 was $2.4 million or $0.05 per share as compared to net income of $1.2 million or $0.03 per share in the fourth quarter of 2006, and net income of $1.6 million or $0.03 per share in the third quarter of 2007. Net income for the year was $5.8 million or $0.12 per share, as compared to $2.2 million or $0.05 per share in the prior year. Included in net income for the three and twelve months ended December 31, 2007 is a net tax benefit of $1.7 million, resulting from the release of the company's remaining valuation allowance against deferred tax assets based on current estimates of future taxable income. Included in net income for the three and twelve months ended December 31, 2006 is a similar net tax benefit of $0.4 million.

Also included in net income for the three and twelve months ended December 31, 2007 and December 31, 2006, is the impact of amortization of stock-based compensation expense as detailed in the table below, related to the adoption of SFAS No. 123( R ) as of January 1, 2006.

Adjusted Net Income and EBITDA

Adjusted net income for the quarter, or net income excluding the impact of amortization of intangible assets and stock-based compensation, was $4.4 million or $0.09 per share, including a benefit from income taxes of $1.7 million. Adjusted net income for the full year was $11.5 million or $0.25 per share, also including the benefit from income taxes of $1.7 million.

Earnings before interest, taxes, depreciation, amortization and stock- based compensation (EBITDA) for the fourth quarter of 2007 was $2.8 million as compared to $1.9 million in the fourth quarter of 2006 and $2.7 million in the third quarter of 2007. EBITDA for the year was $9.7 million as compared to $5.3 million in the prior year.

A reconciliation of the differences between EBITDA and adjusted net income 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 Income included in this press release. 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.

LivePerson considers EBITDA, cash from operations and adjusted net income 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 GAAP, but should not be considered a substitute for, or superior to, GAAP results.

The company's cash balance decreased by approximately $4.0 million to $26.2 million at December 31, 2007 as compared to $30.2 million as of September 30, 2007. The current cash balance reflects the fourth quarter payment of the cash portion of the consideration paid for Kasamba of $9.0 million, partially offset by $1.6 million of cash acquired in the transaction and cash from operations.

Kasamba Acquisition

As previously disclosed, the acquisition of Kasamba closed on October 3, 2007. Kasamba has created one of the world's largest communities of chat- based paid experts, with more than a million monthly site visitors. The acquisition signifies LivePerson's commitment to expanding its global presence as a leader in real-time online solutions, through a direct link with online consumers seeking expert advice.

  Financial Expectations

  First Quarter 2008 Guidance
  -- Revenue of $17.3 - $17.5 million, or approximately 4% quarterly
     sequential revenue growth
  -- Revenue growth excluding the impact in both Q4 2007 and Q1 2008 of
     Kasamba is expected to be approximately 5% - 6% sequentially
  -- EBITDA of $0.04 - $0.05 per share
  -- Adjusted net income of $0.04 - $0.05 per share
  -- GAAP EPS of $0.01
  -- Fully diluted share count of approximately 51.0 million

  Full Year 2008 Guidance
  -- Revenue of $77 - $79 million, or approximately 50% annual growth
  -- Kasamba revenue of $12.0 - $12.5 million
  -- EBITDA of $0.22 - $0.24 per share
  -- Adjusted net income of $0.20 - $0.21 per share
  -- GAAP EPS of $0.04 - $0.05
  -- An estimated effective tax rate of 55%
  -- Fully diluted share count of approximately 51.5 million

The GAAP EPS expectations already include the estimated impact of a change in accounting policy related to adopting SFAS 123® as of January 1, 2006. The impact is expected to decrease net income per share by $0.02 and $0.11, for the first quarter and the full year 2008, respectively. This impact may change based upon additional stock option grants, if any, methodology refinement or other factors.

2007 Non-cash Stock Compensation Expenses

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

                                   Q4 2007     Full Year 2007

  Cost of revenue                   $161            $475
  Product development                502           1,360
  Sales and marketing                299           1,047
  General and administrative         278             999
     Total                        $1,240          $3,881


  2007 Amortization of Intangible Assets

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

                                   Q4 2007     Full Year 2007
  Cost of revenue                   $307            $529
  Product development                 95             128
  General and administrative         391           1,116
     Total                          $793          $1,773



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

                                 Three Months Ended     Twelve Months Ended
                                    December 31,            December 31,
                                  2007        2006        2007        2006

  Total revenue                 $16,775     $10,347     $52,228     $33,521

  Operating expenses:
    Cost of revenue               4,334       2,376      13,534       7,621
    Product development           2,999       1,783       9,032       5,062
    Sales and marketing           5,654       3,258      16,124      11,864
    General and administrative    2,855       1,853       9,208       6,542
    Amortization of other
     intangibles                    391         472       1,116       1,383
       Total operating
        expenses                 16,233       9,742      49,014      32,472

  Income from operations            542         605       3,214       1,049

  Other income, net                 152         202         896         715

  Income before benefit from
   income taxes, net                694         807       4,110       1,764

  Benefit from income taxes, net  1,711         438       1,711         438

  Net income                     $2,405      $1,245      $5,821      $2,202

  Basic net income per
   common share                   $0.05       $0.03       $0.13       $0.06

  Diluted net income per
   common share                   $0.05       $0.03       $0.12       $0.05

  Weighted average shares
   outstanding used in basic
   net income per common
   share calculation         47,336,618  40,979,922  43,696,378  39,680,182

  Weighted average shares
   outstanding used in
   diluted net income per
   common share
   calculation               50,384,112  44,591,617  46,814,080  43,345,232



                               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     Twelve Months Ended
                                    December 31,            December 31,
                                  2007        2006        2007        2006
  Net income in accordance
   with generally
   accepted accounting
   principles                    $2,405      $1,245      $5,821      $2,202
    Add/(less):
    (a) Amortization of
        intangibles                 793         472       1,773       1,383
    (b) Stock-based
        compensation              1,240         600       3,881       2,179
    (c) Depreciation/Loss on
        disposal of fixed
        assets                      217         216         802         666
    (d) Benefit from income
        taxes                    (1,711)       (438)     (1,711)       (438)
    (e) Interest income, net       (152)       (202)       (896)       (715)
  EBITDA (1)                     $2,792      $1,893      $9,670      $5,277
  Diluted EBITDA per common
   share                          $0.06       $0.04       $0.21       $0.12

  Weighted average shares
   used in diluted EBITDA
   per common share          50,384,112  44,591,617  46,814,080  43,345,232


  Net income in accordance
   with generally
   accepted accounting
   principles                    $2,405      $1,245      $5,821      $2,202
    Add:
    (a) Amortization of
        intangibles                 793         472       1,773       1,383
    (b) Stock-based
        compensation              1,240         600       3,881       2,179
  Adjusted net income            $4,438      $2,317     $11,475      $5,764
  Diluted Adjusted net
   income per common share        $0.09       $0.05       $0.25       $0.13

  Weighted average shares
   used in diluted adjusted
   net income per common
   share                     50,384,112  44,591,617  46,814,080  43,345,232

  EBITDA                         $2,792      $1,893      $9,670      $5,277
    Add/(less):
    (a) Changes in operating
        assets and liabilities    1,184         427       1,593      (1,282)
    (b) Provision for doubtful
        accounts                     30           8         103          38
    (c) Benefit from income taxes 1,711         438       1,711         438
    (d) Deferred income taxes    (1,459)     (2,581)     (4,980)     (2,581)
    (e) Interest income, net        152         202         896         715
  Net cash provided by
   operating activities          $4,410        $387      $8,993      $2,605

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



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

                                               December 31,     December 31,
                                                  2007              2006

  ASSETS

  Current assets:
    Cash and cash equivalents                    $26,222           $21,729
    Accounts receivable, net                       6,026             4,269
    Prepaid expenses and other current assets      1,802             1,317
    Deferred tax assets, net                          42                 -
      Total current assets                        34,092            27,315

    Property and equipment, net                    3,733             1,124
    Intangibles, net                               6,953             2,640
    Goodwill                                      51,684             9,673
    Deferred tax assets, net                       4,202             1,580
    Security deposits                                499               299
    Other assets                                   1,325               684
      Total assets                              $102,488           $43,315

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
    Accounts payable                              $3,067              $813
    Accrued expenses                               9,191             3,754
    Deferred revenue                               4,000             3,256
    Deferred tax liabilities, net                    193               259
      Total current liabilities                   16,451             8,082

  Other liabilities                                1,325               684

  Commitments and contingencies

  Total stockholders' equity                      84,712            34,549
          Total liabilities and
           stockholders' equity                 $102,488           $43,315



  About LivePerson

LivePerson is a provider of online engagement solutions that facilitate real-time assistance and trusted 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 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. 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; 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/