LivePerson Reports Second Quarter Revenue Increase of 57% to $11.7 million

NEW YORK, NY - August 2, 2007 - LivePerson, Inc. (NASDAQ: LPSN), a provider of online conversion solutions, today announced financial results for the second quarter ended June 30, 2007.

Revenue for the second quarter was $11.7 million, a 57% increase from the second quarter of 2006, and a 6% sequential increase versus the first quarter of 2007. Sequential revenue growth was due primarily to strong growth from existing enterprise users of Timpani Sales & Marketing, as well as continued strong performance from the small business product line.

"The second quarter came in right in line with our expectations on a number of key measures," CEO Robert LoCascio said. "We signed a solid number of new clients, saw decreased enterprise attrition rates, and experienced strong bookings that will support our second half growth expectations."

LivePerson signed several new blue-chip clients during the quarter including Adobe and National City, as well as:

  -- A leading global Internet destination brand,
  -- A leading US credit card issuer
  -- One of Canada's leading telecommunication service providers,
  -- A leading UK-based credit card issuer, and
  -- A leading UK online fashion brand.

  We expanded business with several existing customers including:

  -- Panasonic,
  -- JCWhitney,
  -- Verizon Wireless, and
  -- a leading regional telecommunication service provider.

Net income for the second quarter of 2007 was $0.9 million or $0.02 per share as compared to net income of $0.4 million or $0.01 per share in the second quarter of 2006, and net income of $0.9 million or $0.02 per share in the first quarter of 2007.

The Company's effective tax rate in the second quarter was zero resulting from a partial release of the company's valuation allowance against deferred tax assets based on current estimates of future taxable income.

Earnings before interest, taxes, depreciation, amortization and stock- based compensation (EBITDA) for the second quarter of 2007 was $2.2 million as compared to $1.0 million in the second quarter of 2006 and $2.0 million in the first quarter of 2007.

The difference between EBITDA per share, a non-GAAP measure, and GAAP EPS, is interest, taxes, depreciation, amortization and stock-based compensation. 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 Income 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 in the table below.

The company's cash balance increased by $2.6 million or 11% to $26.5 million at June 30, 2007 as compared to March 31, 2007.

Financial Expectations

The company currently expects the following financial results, excluding any impact from the expected acquisition of Kasamba, which is anticipated to close on or around October 1:

  -- Revenue of $12.7 - $12.8 million for the third quarter of 2007, or
     approximately 9%-10% quarterly sequential revenue growth
  -- EBITDA of $0.05-$0.06 per share and GAAP EPS of $0.03 for the third
     quarter of 2007
  -- Revenue of $48.5 - $49.5 million for the full year 2007
  -- EBITDA of $0.22 - $0.24 per share and GAAP EPS of $0.11 - $0.12 for the
     full year 2007
  -- An effective tax rate of 0% for the full year 2007

These 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 $0.08, for the third quarter and the full year 2007, respectively. This impact may change based upon additional stock option grants, if any, methodology refinement or other factors.

The company expects the following impact from the Kasamba acquisition, assuming the transaction closes on or around October 1:

  -- An increase in monthly revenue of approximately $1 million upon
     closing.
  -- A decrease in EBITDA (earnings before interest, taxes, depreciation and
     amortization) of $0.01 per share in the fourth quarter of 2007, due
     primarily to the impact of additional share issuances related to the
     anticipated transaction.
  -- A decrease in EPS in the fourth quarter of 2007, due primarily to deal
     related amortization and additional stock compensation expense of
     $0.01-$0.02.

The Kasamba related expectations are unchanged from the company's announcement on June 25.

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


                                    Three Months Ended     Six Months Ended
                                         June 30,               June 30,
                                    2007        2006        2007       2006

  Total revenue                  $11,661      $7,416     $22,630     $14,293

  Operating expenses:
   Cost of revenue                 3,105       1,642       5,894       3,103
   Product development             2,044       1,018       3,864       1,898
   Sales and marketing             3,512       2,856       6,914       5,502
   General and
    administrative                 2,057       1,437       4,079       2,939
   Amortization of other
    intangibles                      242         232         483         464
      Total operating expenses    10,960       7,185      21,234      13,906

  Income from operations             701         231       1,396         387

  Other income, net                  212         170         435         313

  Net income                        $913        $401      $1,831        $700

  Basic net income per
   common share                    $0.02       $0.01       $0.04       $0.02

  Diluted net income per
   common share                    $0.02       $0.01       $0.04       $0.02

  Weighted average shares
   outstanding used in
    basic net income per
     common share
      calculation             43,011,309  38,900,328  42,159,146  38,578,791

  Weighted average shares
   outstanding used in
    diluted net income per
     common share
      calculation             46,726,357  42,818,687  45,757,843  42,471,432



                              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,
                                  2007       2006         2007       2006
  Net income in accordance
   with generally
   accepted accounting
   principles                     $913        $401      $1,831        $700
  Add/(less):
   (a) Amortization of
       intangibles                 325         232         650         464
   (b) Stock-based compensation    898         439       1,712       1,022
   (c) Depreciation/Loss on
       disposal of fixed assets    229         130         438         192
   (d) Interest income, net       (212)       (170)       (435)       (313)
  EBITDA(1)                     $2,153      $1,032      $4,196      $2,065
  Diluted EBITDA per common
   share                         $0.05       $0.02       $0.09       $0.05

  Weighted average shares used
   in diluted EBITDA
   per common share         46,726,357  42,818,687  45,757,843  42,471,432

  EBITDA                        $2,153      $1,032       4,196      $2,065
    Add/(less):
    Changes in operating assets
     and liabilities               191        (766)       (386)       (559)
    Provision for doubtful
     accounts                       -           -           20          -
    Deferred income taxes       (1,054)         -       (2,084)         -
    Interest income, net           212         170         435         313

  Net cash provided by
   operating activities         $1,502        $436      $2,181      $1,819

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

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


                                       June 30, 2007      December 31, 2006

  ASSETS
  Current assets:
   Cash and cash equivalents               $26,534               $21,729
   Accounts receivable, net                  5,037                 4,269
   Prepaid expenses and other
    current assets                           1,302                 1,317
     Total current assets                   32,873                27,315

   Property and equipment, net               1,216                 1,124
   Prepaid expenses                            508                     -
   Intangibles, net                          1,990                 2,640
   Goodwill                                 18,405                 9,673
   Deferred tax assets, net                  3,479                 1,580
   Security deposits                           272                   299
   Other assets                                790                   684
    Total assets                           $59,533               $43,315

  LIABILITIES AND STOCKHOLDERS'
   EQUITY

  Current liabilities:
   Accounts payable                           $419                  $813
   Accrued expenses                          4,212                 3,754
   Deferred revenue                          3,804                 3,256
   Deferred tax liabilities, net                74                   259
    Total current liabilities                8,509                 8,082

  Other liabilities                            790                   684

  Commitments and contingencies

  Total stockholders' equity                50,234                34,549
      Total liabilities and
      stockholders' equity                 $59,533               $43,315



  About LivePerson

LivePerson (NASDAQ: LPSN) is a provider of online conversion solutions. Our hosted software enables companies to identify and proactively engage online visitors-increasing sales, satisfaction and loyalty while reducing service costs. Combining web-interaction technology (chat, email, voice and a self-service knowledgebase) with a deep understanding of consumer behavior and industry best practices, LivePerson's Timpani™ platform engages the right customer, at the right time, with the right communications channel. This Engagement Marketing platform creates more relevant, compelling and personalized experiences-converting traffic into revenues, and facilitating real-time sales and customer service. More than 5,000 companies, including EarthLink, Hewlett-Packard, Microsoft, Qwest and Verizon, rely on LivePerson to help maximize the return on their marketing and e-commerce investments. LivePerson is headquartered in New York City.

EBITDA Financial Disclosure

Investors are cautioned that the EBITDA, or earnings before interest, taxes, depreciation, amortization and stock-based 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 performance. 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.

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 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 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 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/