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LivePerson Reports Fourth Quarter and Full Year 2010 Financial Results
Feb 10, 2011 (03:02 PM EST)


- Fourth quarter revenue increased 21% from prior year and 6% sequentially

- Record EBITDA per share of $0.15 in fourth quarter

- Adjusted net income per share of $0.09 in fourth quarter

- EPS of $0.05 in fourth quarter

- Emmanuel Gill to retire from LivePerson Board

NEW YORK, Feb. 10, 2011 /PRNewswire/ -- LivePerson, Inc. (Nasdaq: LPSN), a leading provider of online engagement solutions that facilitate real-time assistance and expert advice, today announced financial results for the fourth quarter and full year ended December 31, 2010.

(Logo: http://photos.prnewswire.com/prnh/20110105/NY24753LOGO-a)

Revenue

Revenue for the fourth quarter was $29.9 million, a 21% increase from the fourth quarter of 2009, and a 6% sequential increase as compared to the third quarter of 2010. Revenue from business operations for the fourth quarter was $26.2 million, a 23% increase as compared to the fourth quarter of 2009 and a 7% increase as compared to the third quarter of 2010.  Revenue from consumer operations for the fourth quarter was $3.7 million, a 9% increase as compared to the fourth quarter of 2009, and a 3% increase as compared to the third quarter of 2010.    

Revenue for the full year was $109.9 million, a 26% increase from $87.5 million in 2009. Revenue from business operations for the full year was $95.7 million, a 27% increase from $75.5 million in 2009.  Revenue from consumer operations for the full year was $14.2 million, a 19% increase from $11.9 million in 2009.

"The fourth quarter capped a very strong 2010 for LivePerson," said CEO Robert LoCascio. "We were able to exceed our original revenue guidance for the year by 4%, successfully launched our developer platform, and continued investing in new product initiatives and infrastructure, all while maintaining impressive operating margins."

Customer Expansion

LivePerson added 14 new enterprise clients in the quarter, including:

  • A leading specialty retailer
  • Petco, a leading pet specialty retailer
  • One of Europe's 10 largest banks

The company also expanded business with

  • One of the largest US-based cellular service providers
  • Vodaphone UK
  • One of the leading global entertainment companies
  • A leading provider of software, services and solutions for consumers and businesses
  • A leading automotive credit provider
  • Adobe
  • A leading corporate information services provider
  • One of the top 3 US banks

Net Income

Net income for the fourth quarter of 2010 was $2.7 million or $0.05 per share as compared to $3.1 million or $0.06 per share in the fourth quarter of 2009, and net income of $2.8 million or $0.05 per share in the third quarter of 2010.   Net income for the full year was $9.3 million or $0.18 per share, as compared to $7.8 million or $0.16 per share in the prior year.  

Adjusted Net Income and EBITDA

LivePerson considers adjusted net income and earnings before other income/(expense), taxes, depreciation, amortization and stock-based compensation (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 Operations included below.

The difference between EBITDA per share, a non-GAAP measure, and GAAP EPS, is interest, taxes, depreciation, amortization, stock-based compensation and other non-cash charges, if any.  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 fourth quarter of 2010 was $4.6 million or $0.09 per share, as compared to $4.7 million or $0.09 per share in the fourth quarter of 2009, and $4.6 million or $0.09 per share in the third quarter of 2010.  Adjusted net income for the full year was $15.9 million or $0.30 per share, as compared to $14.5 million or $0.30 per share in the prior year.

EBITDA for the fourth quarter of 2010 was $7.9 million or $0.15 per share, as compared to $7.1 million or $0.14 per share in the fourth quarter of 2009, and $7.5 million or $0.14 per share in the third quarter of 2010.   EBITDA for the full year 2010 was $26.8 million or $0.51 per share, as compared to $22.8 million or $0.47 per share in the prior year.

Cash

The company's cash balance was $61.3 million at December 31, 2010 as compared to $50.4 million as of September 30, 2010, and $45.6 million at December 31, 2009.  The company generated $7.9 million of cash from operations in the fourth quarter.  Also during the fourth quarter, the company incurred planned capital expenditures related primarily to the purchase of servers and computer networking equipment, resulting in a cash outlay of approximately $2.0 million.  

For the full year, the company generated $15.5 million of cash from operations, and incurred planned capital expenditures related primarily to the purchase of servers and computer networking equipment, resulting in a cash outlay of approximately $8.0 million.      

Board of Directors Transition

In addition, the company announced today that Emmanuel Gill will retire from LivePerson's Board of Directors after nearly 10 years of dedicated service, effective as of February 11, 2011.  "We are extremely grateful for Emmanuel's many years of contribution and service to the company, having been with us through nearly a decade of extraordinary change and growth," said Mr. LoCascio.  Mr. Gill indicated that he is very proud of the company's growth and achievements to date, and is leaving for personal reasons in the interest of dedicating more of his time to other businesses.  The company intends to fill Mr. Gill's board seat, and has commenced a search for a replacement.  Longstanding director William Wesemann has been appointed by the Board to replace Mr. Gill on the company's Audit Committee, effective as of Mr. Gill's departure.

Financial Expectations

Following is the company's current expectation for financial and operating performance:

First Quarter 2011

  • Revenue of $30.0 - $30.5 million
  • EBITDA of $0.12 - $0.14 per share
  • Adjusted net income per share of $0.06 - $0.08
  • GAAP EPS of $0.04 - $0.05
  • Fully diluted share count of approximately 54.5 million

Full Year 2011

  • Revenue of $133 - $136 million
  • EBITDA of $0.60 - $0.63 per share
  • Adjusted net income per share of $0.33 - $0.36
  • GAAP EPS of $0.20 - $0.22
  • Fully diluted share count of approximately 55.5 million

Other Full Year 2011 Assumptions

  • Amortization of intangibles of approximately $1.0 million
  • Stock-compensation expense of approximately $6.0 million
  • Depreciation of approximately $8.0 million
  • Effective tax rate of approximately 36%
  • Cash tax rate of approximately 36%
  • Capital expenditures of approximately $8.0 million

Stock-Based Compensation  

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


Q4 2010

Q4 2009

FY 2010

FY 2009

Cost of revenue

$211

$211

$865

$790

Product development

307

372

1,329

1,402

Sales and marketing

401

376

1,371

1,337

General and administrative

620

276

1,577

1,197

  Total

$1,539

$1,235

$5,142

$4,726



Amortization of Intangible Assets  

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


Q4 2010

Q4 2009

FY 2010

FY 2009

Cost of revenue

$307

307

$1,226

$1,228

General and administrative

11

83

260

745

  Total

$318

$390

$1,486

$1,973



Earnings Teleconference and Video Discussion Information

The company will discuss its fourth quarter and full year 2010 financial results during a teleconference today, February 10, 2011, at 5:00 p.m. ET.  To participate, please call 877-507-3684 before 5:00 p.m. ET. International callers, please dial 706-634-9559. Please reference the conference ID "40530761."

If you are unable to participate, the teleconference will be available for replay at 6:00 p.m. ET on February 10, 2011 until May 10, 2011. To access the replay, please call 800-642-1687 (U.S. and Canada) or 706-645-9291 (international). Please reference the conference ID "40530761."

The company will also post a video discussion of its fourth quarter 2010 results on YouTube. To view, click on the following link: http://www.youtube.com/user/myliveperson.

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,



2010


2009


2010


2009

Revenue


$        29,935


$        24,768


$      109,862


$        87,490










Operating expenses:










Cost of revenue


8,235


6,068


29,640


21,076


Product development


4,257


3,163


15,711


12,111


Sales and marketing


8,404


7,408


32,835


27,355


General and administrative


4,931


3,427


17,077


13,417


Amortization of intangibles


11


83


259


745




Total operating expenses


25,838


20,149


95,522


74,704










Income from operations


4,097


4,619


14,340


12,786










Other income (expense), net


(43)


(35)


(7)


14










Income before provision for income taxes


4,054


4,584


14,333


12,800










Provision for income taxes


1,312


1,493


5,074


5,037










Net income


$          2,742


$          3,091


$          9,259


$          7,763










Basic net income per common share


$            0.05


$            0.06


$            0.18


$            0.16










Diluted net income per common share


$            0.05


$            0.06


$            0.18


$            0.16










Weighted average shares outstanding used in basic net income per common share calculation


51,133,917


48,786,986


50,721,880


47,962,688










Weighted average shares outstanding used in diluted net income per common share calculation


53,831,339


51,065,181


52,907,541


49,008,440



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,


2010


2009


2010


2009

Net income in accordance with generally









accepted accounting principles

$          2,742


$          3,091


$          9,259


$          7,763


Add/(less):









(a)

Amortization of intangibles

318


390


1,486


1,973


(b)

Stock-based compensation

1,539


1,235


5,142


4,726


(c)

Depreciation

1,903


899


5,791


3,347


(d)

Provision for income taxes

1,312


1,493


5,074


5,037


(e)

Other (income) expense, net

43


35


7


(14)

EBITDA (1)

$          7,857


$          7,143


$        26,759


$        22,832

Diluted EBITDA per common share

$            0.15


$            0.14


$            0.51


$            0.47









Weighted average shares used in diluted EBITDA









per common share

53,831,339


51,065,181


52,907,541


49,008,440

















Net income in accordance with generally









accepted accounting principles

$          2,742


$          3,091


$          9,259


$          7,763


Add:









(a)

Amortization of intangibles

318


390


1,486


1,973


(b)

Stock-based compensation

1,539


1,235


5,142


4,726

Adjusted net income

$          4,599


$          4,716


$        15,887


$        14,462

Diluted adjusted net income per common share

$            0.09


$            0.09


$            0.30


$            0.30









Weighted average shares used in diluted adjusted net income per common share

53,831,339


51,065,181


52,907,541


49,008,440

















EBITDA


$          7,857


$          7,143


$        26,759


$        22,832


Add/(less):









(a)

Changes in operating assets and liabilities

585


308


(7,127)


293


(b)

Provision for doubtful accounts

101


25


166


55


(c)

Provision for income taxes

(1,312)


(1,493)


(5,074)


(5,037)


(d)

Deferred income taxes

694


2,229


832


2,865


(e)

Other income (expense), net

(43)


(35)


(7)


14

Net cash provided by operating activities

$          7,882


$          8,177


$        15,549


$        21,022









(1)  Earnings/(loss) before other income/(expense), taxes, depreciation, amortization, stock-based compensation and other non-cash charges.



LivePerson, Inc.

Condensed Consolidated Balance Sheets

(In Thousands)

Unaudited






December 31, 2010


December 31, 2009





ASSETS








Current assets:





Cash and cash equivalents

$                     61,336


$                     45,572


Accounts receivable, net

16,491


10,265


Prepaid expenses and other current assets

6,341


3,661


Deferred tax assets, net

1,529


1,460



Total current assets

85,697


60,958






Property and equipment, net

12,762


9,551


Intangibles, net

2,124


2,821


Goodwill

24,015


23,920


Deferred tax assets, net

3,876


4,777


Deferred implementation costs, net of current

164


136


Security deposits

499


326


Other assets

2,006


1,792



Total assets

$                   131,143


$                   104,281





LIABILITIES AND STOCKHOLDERS' EQUITY








Current liabilities:





Accounts payable

$                       6,416


$                       5,375


Accrued expenses

12,111


10,895


Deferred revenue

5,570


4,692



Total current liabilities

24,097


20,962





Deferred revenue, net of current

513


506

Other liabilities

1,890


1,676



Total liabilities

26,500


23,144





Commitments and contingencies








Total stockholders' equity

104,643


81,137



Total liabilities and stockholders' equity

$                   131,143


$                   104,281



About LivePerson

LivePerson is a leading provider of online engagement solutions that facilitate real-time assistance and 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 8,500 companies, including Cisco, Hewlett-Packard, IBM, Microsoft 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/(loss) before other income/(expense), 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: potential fluctuations in our quarterly and annual results; the adverse effect that the global recession may have on our business; competition in the real-time sales, marketing, customer service and online engagement solutions market; risks related to the operational integration of acquisitions; risks related to new regulatory or other legal requirements that could materially impact our business; risks related to our international operations, particularly our operations in Israel, and the civil and political unrest in that region; impairments to goodwill that result in significant charges to earnings; volatility of the value of certain currencies in relation to the US dollar, particularly the New Israeli Shekel, U.K. pound and Euro;  continued use by our clients of the LivePerson services and their purchase of additional services; responding to rapid technological change and changing client preferences; technology systems beyond our control and technology-related defects that could disrupt the LivePerson services; privacy concerns relating to the Internet that could result in new legislation or negative public perception; risks related to the regulation or possible misappropriation of personal information; legal liability and/or negative publicity for the services provided to consumers via our technology platforms; and risks related to protecting our intellectual property rights or potential infringement of the intellectual property rights of third parties. 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.