LivePerson Improves Bottom Line 92% vs. Prior Quarter, To Loss of $0.03 Per Share; Reports Gross Margin of 82%
Company Reaches Cash Breakeven in December as Annual Revenue Increases 24% vs. 2000; Reports Yearend Cash Balance of $10.1 Million
PRNewswire-FirstCall

NEW YORK, NY - February 6, 2002 - LivePerson, Inc. (NASDAQ: LPSN), a leading Application Service Provider (ASP) of technology facilitating real-time sales and customer service for companies doing business on the Internet, today announced financial results for the quarter and year ended December 31, 2001.

Revenue for the three months ended December 31, 2001 was $1.8 million, a slight increase from $1.7 million in the quarter ended September 30, 2001, and down 23% from $2.3 million in the corresponding period of 2000. Revenue for the twelve months ended December 31, 2001 was $7.8 million, a 24% increase from $6.3 million in the prior year.

Historical net loss for the three months ended December 31, 2001 was $(1.2) million, as compared to $(13.7) million for the three months ended September 30, 2001, and $(8.4) million in the corresponding quarter of 2000. Historical net loss for the twelve months ended December 31, 2001 was $(27.3) million, as compared to $(61.3) million in the prior year.

Historical basic and diluted net loss per common share for the three months ended December 31, 2001 was $(0.03) per share, representing a 92% improvement as compared to $(0.40) per share for the three months ended September 30, 2001, and an 88% improvement as compared to $(0.25) per share for the corresponding quarter in 2000. Historical basic and diluted net loss per common share for the twelve months ended December 31, 2001 was $(0.80) per share, as compared to $(2.50) per share for the prior year.

Commenting on the results for the fourth quarter, Chief Executive Officer Robert LoCascio stated, "We continue to be pleased with the Company's consistent operating progress. We achieved a gross margin in the fourth quarter of better than 80%. We achieved cash breakeven results for the month of December and we expect that trend to continue for the full first quarter of 2002. We also reduced our fourth quarter pro forma loss to $(0.01) per share, or $0.03 per share better than our previous guidance. We're very pleased that we've been successfully able to strengthen our financial foundation while improving our margins."

Pro forma net loss for the three months ended December 31, 2001, excluding non-cash compensation and amortization of goodwill, was $(0.3) million, as compared to $(3.2) million for the three months ended September 30, 2001, and $(7.5) million in the corresponding quarter of 2000. Pro forma net loss for the twelve months ended December 31, 2001, excluding non-cash compensation, amortization of goodwill and restructuring charges, was $(12.6) million, as compared to $(29.5) million in the prior year. No restructuring charges were incurred in the fourth quarter of 2001.

Pro forma basic and diluted net loss per share for the three months ended December 31, 2001, excluding non-cash compensation and amortization of goodwill, was $(0.01) per share, representing an 89% improvement as compared to $(0.09) per share for the quarter ended September 30, 2001, and a 95% improvement as compared to $(0.22) per share for the corresponding period in 2000.

Pro forma basic and diluted net loss per share for the twelve months ended December 31, 2001, excluding non-cash compensation, amortization of goodwill and restructuring charges, was $(0.37), as compared to $(1.02) per share in the prior year.

President and Chief Financial Officer Tim Bixby stated, "In a grueling IT spending environment, we've reduced both our pro forma and historical net loss per share by roughly 90% versus the prior three months, and generated solid gross margins by dramatically reducing our cost of revenues. We have solidified our balance sheet and have no debt, positioning us well to benefit as the economy recovers."

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

                                 Three Months Ended          Year Ended
                                     December 31,            December 31,
                                     (Unaudited)
                                   2001        2000        2001        2000
  Total revenues                 $1,789      $2,330      $7,806      $6,279

  Operating expenses:
    Cost of revenues                328       2,443       6,740       7,888
    Product development             509       2,079       3,509       8,209
    Sales and marketing             662       4,089       5,089      14,529
    General and
     administrative                 662       1,670       5,694       6,994
    Amortization of goodwill
     and other intangibles          745         619       2,975         619
    Non-cash compensation,
     net of reversals               108         256         677      13,245
    Non-cash compensation
     credit related to
     restructuring, net               -           -      (1,720)          -
    Restructuring charges             -           -      12,740           -
       Total operating
        expenses                  3,014      11,156      35,704      51,484

  Loss from operations           (1,225)     (8,826)    (27,898)    (45,205)

  Other income, net                  58         459         637       1,871

  Net loss                       (1,167)     (8,367)    (27,261)    (43,334)
  Non-cash preferred stock
   dividend                           -           -           -      18,000

  Net loss attributable to
   common stockholders          $(1,167)    $(8,367)   $(27,261)   $(61,334)

  Basic and diluted net loss
   per common share              $(0.03)     $(0.25)     $(0.80)     $(2.50)

  Weighted average shares
   outstanding used in basic
   and diluted
    net loss per common
     share calculation       34,003,610  33,441,094  33,987,895  24,535,078

  Unaudited Supplemental Data
  The following pro forma net loss 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
  pro forma financial information because we believe that it is helpful to
  some investors as one measure of our operations. We caution investors that
  pro forma 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.

  Revenues                       $1,789      $2,330      $7,806      $6,279
  Cost of revenues                  328       2,443       6,740       7,888
  Gross Profit                   $1,461       $(113)     $1,066     $(1,609)
  Gross Margin                      82%         -5%         14%        -26%

  Net loss attributable to
   common stockholders in
   accordance
    with generally accepted
     accounting principles      $(1,167)    $(8,367)   $(27,261)   $(61,334)
  Less:
   (i)   Amortization of
          goodwill and other
           intangibles              745         619       2,975         619
   (ii)  Non-cash compensation,
          net of reversals          108         256         677      13,245
   (iii) Non-cash compensation
          credit related to
           restructuring, net         -           -      (1,720)          -
   (iv)  Restructuring charges        -           -      12,740           -
   (v)   Non-cash preferred
          stock dividend              -           -           -      18,000
  Pro forma net loss              $(314)    $(7,492)   $(12,589)   $(29,470)

  Pro forma basic and
   diluted net loss per
    share (a)                    $(0.01)     $(0.22)     $(0.37)     $(1.02)

  Pro forma weighted average
   shares used in
      basic and diluted net
       loss per share (a)    34,003,610  33,441,094  33,987,895  28,971,195

  (a) Pro forma weighted average shares outstanding for 2000 assumes the
      conversion of convertible preferred stock into an equivalent number of
      shares of common stock at the time of their original issuance.


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

                                       December 31, 2001  December 31, 2000
  ASSETS

  Current assets:
    Cash, cash equivalents and
     marketable securities                       $10,136            $21,449
    Accounts receivable, net                         620              1,271
    Prepaid expenses and other current
     assets                                          389                747
      Total current assets                        11,145             23,467

    Property and equipment, net                      915             12,883
    Goodwill and other intangibles, net            5,338              8,291
    Restricted cash related to leases                  -              2,000
    Security deposits                                122                 68
    Other non-current assets                         107                  -
    Deferred costs, net                                -                291
      Total assets                               $17,627            $47,000

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
    Accounts payable                                $592             $1,126
    Accrued expenses                               2,204              1,446
    Deferred revenue                                 560                615
      Total current liabilities                    3,356              3,187

  Long-term deferred revenue                           -                277
  Deferred rent                                        -                304
  Deferred gain on sale-leaseback                      -                457

  Commitments and contingencies

  Total stockholders' equity                      14,271             42,775
          Total liabilities and
           stockholders' equity                  $17,627            $47,000

  About LivePerson

LivePerson (http://www.liveperson.com/) is a leading Application Service Provider (ASP) of technology facilitating real-time sales and customer service for companies doing business on the Internet. The LivePerson service enables online businesses to communicate with Internet users in real time, thereby enhancing the online experience. With LivePerson Exchange, consisting of Chat, FAQ, Email and Document Management, LivePerson offers clients the opportunity to increase sales, reduce customer service costs and increase responsiveness to customer needs. LivePerson is headquartered in New York City, with R&D facilities in Tel Aviv, Israel.

Pro Forma Financial Disclosure:

Investors are cautioned that the pro forma net loss 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 pro forma financial information because we believe that it is helpful to some investors as one measure of our operations. We caution investors that pro forma financial information, 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: our possible delisting from Nasdaq; 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; risks related to managing our expanding operations and staff attrition; integration of acquisitions, including the acquisition of HumanClick Ltd. and other potential acquisitions; our dependence on key employees; risks related to our international operations; 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.

   Contact:
   Maria Gomez
   LivePerson, Inc.
   212-609-4219
   mgomez@liveperson.com

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SOURCE: LivePerson, Inc.

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

Website: http://www.liveperson.com/