LivePerson Reports Third Quarter 2008 Financial Results

- Quarterly revenue increases 51% from prior year

- Business solutions revenue grows 30% from prior year, and 6% from prior quarter

- GAAP EPS is $0.01 for third quarter

- EBITDA per share is $0.05 for third quarter

NEW YORK

NEW YORK, Nov. 5 /PRNewswire-FirstCall/ -- LivePerson, Inc. (NASDAQ: LPSN), a leading provider of online communication platforms that facilitate real-time assistance and expert advice, today announced financial results for the third quarter ended September 30, 2008.

Revenue

Revenue for the third quarter was $19.4 million, a 51% increase from the third quarter of 2007, and a 4% sequential increase as compared to the second quarter of 2008. Revenue from business solutions for the third quarter was $16.7 million, a 30% increase from the third quarter of 2007, and a 6% sequential increase as compared to the preceding quarter.

Sequential revenue growth was due primarily to expansion of existing enterprise customers, as well as sales to new small business customers.

"LivePerson delivered another strong quarter with revenue, earnings and cash flow all in line with guidance," CEO Robert LoCascio said. "In today's uncertain economic climate, consumers are turning to the Web now more than ever for advice, information and answers. LivePerson's platform enables individuals to connect with businesses and independent experts alike, giving people the personalized information they need, when they need it."

  Client and Partner Expansion
  LivePerson added several new clients, including:

  -- One of the largest cable providers in the nation
  -- A world leader in the mobile phone industry
  -- A global management consulting, technology services and outsourcing
     company
  -- Quest Software EMEA


  The company expanded business with several existing customers, including:

  -- Verizon
  -- AT&T
  -- National City Corporation
  -- An industry leader in personal computers and digital media
  -- A prominent resort and theme park operator


  Net Income

Net income for the third quarter of 2008 was $0.4 million or $0.01 per share as compared to net income of $1.6 million or $0.03 per share in the third quarter of 2007, and a net loss of $0.2 million or $0.00 per share in the second 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 Income 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 third quarter of 2008 was $2.1 million or $0.04 per share, as compared to $2.8 million or $0.06 per share in the comparable period in 2007, and $1.7 million or $0.04 per share in the second quarter of 2008.

EBITDA for the third quarter of 2008 was $2.7 million or $0.05 per share, as compared to $2.7 million or $0.06 per share in the third quarter of 2007, and $1.9 million or $0.04 per share in the second quarter of 2008.

Cash

The company's cash balance is $23.8 million at September 30, 2008 as compared to $23.5 million as of June 30, 2008. The company generated approximately $2.7 million from operations. Also during the third quarter, the company incurred capital expenditures related primarily to the purchase of servers and computer networking equipment, resulting in a cash outlay of approximately $2.4 million.

  Financial Expectations

  Fourth Quarter 2008
  -- Revenue of $20.0 - $20.5 million
  -- EBITDA of $0.04 - $0.05 per share
  -- Adjusted net income of $0.02 - $0.04 per share
  -- Fully diluted share count of approximately 49 million

  Full Year 2008
  -- Revenue of $75.0 - $75.5 million
  -- EBITDA of $0.16 - $0.18 per share
  -- Adjusted net income of $0.13 - $0.14 per share
  -- Fully diluted share count of approximately 49 million


  Stock-Based Compensation

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

                                Q3 2008
  Cost of revenue                 $145
  Product development              302
  Sales and marketing              292
  General and administrative       275
      Total                     $1,014



  Amortization of Intangible Assets

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

                                Q3 2008
  Cost of revenue                 $307
  General and administrative       352
      Total                       $659



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

                                  Three Months Ended      Nine Months Ended
                                    September 30,            September 30,
                                   2008        2007        2008        2007
  Total revenue                  $19,375     $12,823     $55,048     $35,453

  Operating expenses:
    Cost of revenue                5,226       3,305      15,346       9,199
    Product development            3,299       2,169       9,876       6,033
    Sales and marketing            6,624       3,556      18,864      10,470
    General and administrative     3,399       2,274      10,034       6,353
    Amortization of other
     intangibles                     352         242       1,134         725
       Total operating expenses   18,900      11,546      55,254      32,780

  Income (loss) income from
   operations                        475       1,277        (206)      2,673

  Other (expense) income, net        (44)        309         145         744

  Income (loss) before
   benefit from income taxes         431       1,586         (61)      3,417

  Provision for (benefit
   from) income taxes                 21           -         (68)          -

  Net income                        $410      $1,586          $7      $3,417

  Basic net income per
   common share                    $0.01       $0.04       $0.00       $0.08

  Diluted net income per
   common share                    $0.01       $0.03       $0.00       $0.07

  Weighted average shares
   outstanding used in basic
   net income per common
   share calculation          47,229,252  43,080,475  47,433,924  42,469,631

  Weighted average shares
   outstanding used in
   diluted net income per
   common share calculation   48,678,016  46,328,876  49,064,151  45,942,436



                             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      Nine Months Ended
                                     September 30,           September 30,
                                   2008        2007        2008        2007

  Net income in accordance
   with generally accepted
   accounting principles           $410      $1,586          $7      $3,417
    Add/(less):
    (a)Amortization of
        intangibles                 659         329       2,055         978
    (b)Stock-based
        compensation              1,014         930       3,178       2,642
    (c)Depreciation                 526         146       1,324         585
    (d)Provision for (benefit
        from) income taxes           21           -         (68)          -
    (e)Other expense
       (income), net                 44        (309)       (145)       (744)
  EBITDA (1)                     $2,674      $2,682      $6,351      $6,878
  Diluted EBITDA per common
   share                          $0.05       $0.06       $0.13       $0.15

  Weighted average shares
   used in diluted EBITDA
   per common share          48,678,016  46,328,876  49,064,151  45,942,436


  Net (loss) income in
   accordance with generally
   accepted accounting
   principles                      $410      $1,586          $7      $3,417
    Add:
    (a)Amortization of
        intangibles                 659         329       2,055         978
    (b)Stock-based
        compensation              1,014         930       3,178       2,642
  Adjusted net income            $2,083      $2,845      $5,240      $7,037
  Diluted adjusted net
   income per common share        $0.04       $0.06       $0.11       $0.15

  Weighted average shares
   used in diluted adjusted
   net income per common
   share                     48,678,016  46,328,876  49,064,151  45,942,436


  EBITDA                         $2,674      $2,682      $6,351      $6,878
    Add/(less):
    (a)Changes in operating
        assets and liabilities     (170)        795        (338)        406
    (b)Provision for doubtful
        accounts                      -          54          68          74
    (c)(Provision for) benefit
        from income taxes           (21)          -          68           -
    (d)Deferred income taxes        211      (1,437)        (39)     (3,521)
    (e)(Other expense)
        income, net                 (44)        309         145         744
  Net cash provided by
   operating activities          $2,650      $2,403      $6,255      $4,581

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



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

                                      September 30, 2008  December 31, 2007

  ASSETS

  Current assets:
    Cash and cash equivalents                    $23,773            $26,222
    Accounts receivable, net                       6,910              6,026
    Prepaid expenses and other current
     assets                                        2,270              1,802
    Deferred tax assets, net                       1,569                 42
      Total current assets                        34,522             34,092

    Property and equipment, net                    7,462              3,733
    Intangibles, net                               4,898              6,953
    Goodwill                                      47,971             51,684
    Deferred tax assets, net                       6,336              4,202
    Security deposits                                385                499
    Other assets                                   1,677              1,325
      Total assets                              $103,251           $102,488

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
    Accounts payable                              $4,022             $3,067
    Accrued expenses                               8,366              9,191
    Deferred revenue                               4,408              4,000
    Deferred tax liabilities, net                      -                193
      Total current liabilities                   16,796             16,451

  Other liabilities                                1,677              1,325

  Commitments and contingencies

  Total stockholders' equity                      84,778             84,712
      Total liabilities and stockholders'
       equity                                   $103,251           $102,488


  About LivePerson

LivePerson, founded in 1995 and headquartered in New York City, is a leading provider of online communication platforms that facilitate real-time assistance and expert advice. Intelligently connecting businesses and individual experts with consumers seeking help on the Web, LivePerson's platforms create more relevant, compelling and personalized online experiences. Every month, millions of people turn to LivePerson to get the information and advice they need to succeed online. More than 7,000 companies, including EarthLink, Hewlett-Packard, Microsoft, Qwest, and Verizon, and 30,000 individual experts rely on LivePerson to maximize the impact of the online channel.

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: Tim Bixby of LivePerson, Inc., +1-212-609-4200,
bixby@liveperson.com; or Budd Zuckerman of Genesis Select Corp.,
+1-303-415-0200, budd@genesisselect.com, for LivePerson, Inc.

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