For Immediate Release
Media Contacts:
Tim Bixby LivePerson, Inc. (212) 609-4200 bixby@liveperson.com | Budd Zuckerman Genesis Select Corp. (303) 415-0200 budd@genesisselect.com |
LivePerson Reports Fourth Quarter 2008 Financial Results
| | · | Quarterly revenue increases 17% from prior year |
| | · | Full year revenue increases 43% from prior year |
| | · | Business operations revenue grows 30% from prior year, and 3% from prior quarter |
| | · | EBITDA per share is $0.07 for fourth quarter, $0.20 for full year |
NEW YORK, NY – February 11, 2009 – 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 fourth quarter and full year ended December 31, 2008.
Revenue
Revenue for the fourth quarter was $19.6 million, a 17% increase from the fourth quarter of 2007, and a 1% sequential increase as compared to the third quarter of 2008. Revenue from business operations for the fourth quarter was $17.2 million, a 23% increase from the fourth quarter of 2007, and a 3% sequential increase as compared to the third quarter of 2008.
Revenue for the full year was $74.7 million, a 43% increase from 2007. Revenue from business operations for the year was $64.1 million, a 30% increase from 2007.
As a result of the significant deterioration of the company’s market capitalization in the fourth quarter of 2008, the company reevaluated goodwill related to its consumer operations. Due to weaker than expected financial performance of these operations in the latter portion of 2008, the company recorded a non-cash goodwill impairment charge of $23.5 million or $0.50 per share. The charge is a non-cash item, and therefore had no impact on the company’s cash flows.
“While a tough external economic environment has made our growth targets more difficult to reach, our performance against cost control targets in the fourth quarter was strong and has created a firm foundation to build upon in 2009,” CEO Robert LoCascio said. “With gross margin improvement for the third consecutive quarter and record quarterly EBITDA, we continue to see impressive operating improvements.”
Client and Partner Expansion
LivePerson added several new clients, including:
| | · | a global leader in consumer electronics |
| | · | the world’s largest online florist and gift shop |
The company expanded business with customers, including:
| | · | the worlds leading provider of networking equipment |
| | · | the leading online photo service |
| | · | a leading global financial lending and services company |
| | · | the world’s largest home improvement retailer |
Net Income/Loss
Net loss for the fourth quarter of 2008 was $23.8 million or $0.50 per share as compared to net income of $2.4 million or $0.05 per share in the fourth quarter of 2007, and net income of $0.4 million or $0.01 per share in the third quarter of 2008. Net loss for the full year was $23.8 million or $0.50 per share as compared to net income of $5.8 million or $0.12 per share in 2007. Net loss in both the fourth quarter and the full year of 2008 included the impact of the goodwill impairment of $23.5 million or $0.50 per share, and a tax provision of $1.2 million, or $0.03 per share.
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 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, excluding the impact of the goodwill impairment, for the fourth quarter of 2008 was $1.3 million or $0.03 per share, as compared to $4.4 million or $0.09 per share in the comparable period in 2007, and $2.1 million or $0.04 per share in the third quarter of 2008. Adjusted net income, excluding the impact of the goodwill impairment, for the full year was $6.6 million or $0.14 per share, as compared to $11.5 million or $0.25 per share in 2007.
EBITDA for the fourth quarter of 2008 was $3.5 million or $0.07 per share, as compared to $2.8 million or $0.06 per share in the fourth quarter of 2007, and $2.7 million or $0.05 per share in the third quarter of 2008. EBITDA for the full year was $9.9 million or $0.20 per share, as compared to $9.7 million or $0.21 per share in 2007.
Cash
The company’s cash balance was $25.5 million at December 31, 2008 as compared to $23.8 million as of September 30, 2008. The company generated $1.7 million 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 $1.4 million. For the full year, capital expenditures were $6.8 million.
Financial Expectations
First Quarter 2009
| | · | Revenue of $19.5 - $20.0 million |
| | · | EBITDA of $0.05 - $0.06 per share |
| | · | GAAP EPS of $0.00 - $0.01 |
| | · | Fully diluted share count of approximately 49 million |
Full Year 2009
| | · | Revenue of $84 - $86 million |
| | · | EBITDA of $0.23 - $0.27 per share |
| | · | GAAP EPS of $0.04 - $0.05 |
| | · | Fully diluted share count of approximately 49 million |
Other Full Year 2009 Assumptions
| | · | Amortization of intangibles of approximately $2.0 million |
| | · | Stock-compensation expense of approximately $4.3 million |
| | · | Depreciation of approximately $3.7 million |
| | · | Effective tax rate of approximately 65% |
| | · | Cash tax rate of approximately 40% |
| | · | Capital expenditures of approximately $7.0 - $9.0 million |
Stock-Based Compensation
Included in the accompanying financial results are expenses related to stock-based compensation, as follows (in thousands):
| | | | Q4 2008 | |
| Cost of revenue | | $ | 137 | |
| Product development | | | 271 | |
| Sales and marketing | | | 369 | |
| General and administrative | | | 311 | |
| Total | | $ | 1,088 | |
Amortization of Intangible Assets
Included in the accompanying financial results are expenses related to the amortization of intangible assets, as follows (in thousands):
| | | | Q4 2008 | |
| Cost of revenue | | $ | 307 | |
| General and administrative | | | 272 | |
| Total | | $ | 579 | |
LivePerson, Inc.
Condensed Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Data)
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| Revenue | | $ | 19,607 | | | $ | 16,775 | | | $ | 74,655 | | | $ | 52,228 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Cost of revenue | | | 4,960 | | | | 4,335 | | | | 20,307 | | | | 13,534 | |
| Product development | | | 3,023 | | | | 2,999 | | | | 12,899 | | | | 9,032 | |
| Sales and marketing | | | 7,260 | | | | 5,654 | | | | 26,124 | | | | 16,124 | |
| General and administrative | | | 3,009 | | | | 2,857 | | | | 13,042 | | | | 9,208 | |
| Amortization of intangibles | | | 272 | | | | 390 | | | | 1,407 | | | | 1,116 | |
| Goodwill impairment | | | 23,501 | | | | - | | | | 23,501 | | | | - | |
| Total operating expenses | | | 42,025 | | | | 16,235 | | | | 97,280 | | | | 49,014 | |
| | | | | | | | | | | | | | | | | |
| (Loss) income from operations | | | (22,418 | ) | | | 540 | | | | (22,625 | ) | | | 3,214 | |
| | | | | | | | | | | | | | | | | |
| Other (expense) income, net | | | (192 | ) | | | 153 | | | | (47 | ) | | | 896 | |
| | | | | | | | | | | | | | | | | |
| (Loss) income before provision for (benefit from) income taxes | | | (22,610 | ) | | | 693 | | | | (22,672 | ) | | | 4,110 | |
| | | | | | | | | | | | | | | | | |
| Provision for (benefit from) income taxes | | | 1,234 | | | | (1,711 | ) | | | 1,165 | | | | (1,711 | ) |
| | | | | | | | | | | | | | | | | |
| Net (loss) income | | $ | (23,844 | ) | | $ | 2,404 | | | $ | (23,837 | ) | | $ | 5,821 | |
| | | | | | | | | | | | | | | | | |
| Basic net (loss) income per common share | | $ | (0.50 | ) | | $ | 0.05 | | | $ | (0.50 | ) | | $ | 0.13 | |
| | | | | | | | | | | | | | | | | |
| Diluted net (loss) income per common share | | $ | (0.50 | ) | | $ | 0.05 | | | $ | (0.50 | ) | | $ | 0.12 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding used in basic net | | | | | | | | | | | | | | | | |
| (loss) income per common share calculation | | | 47,411,354 | | | | 47,336,618 | | | | 47,428,251 | | | | 43,696,378 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding used in diluted net | | | | | | | | | | | | | | | | |
| (loss) income per common share calculation | | | 47,411,354 | | | | 50,384,112 | | | | 47,428,251 | | | | 46,814,080 | |
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, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| Net (loss) income in accordance with generally | | | | | | | | | | | | |
| accepted accounting principles | | $ | (23,844 | ) | | $ | 2,404 | | | $ | (23,837 | ) | | $ | 5,821 | |
| Add/(less): | | | | | | | | | | | | | | | | |
(a) Goodwill impairment | | | 23,501 | | | | - | | | | 23,501 | | | | - | |
(b) Amortization of intangibles | | | 579 | | | | 793 | | | | 2,634 | | | | 1,772 | |
(c) Stock-based compensation | | | 1,088 | | | | 1,240 | | | | 4,266 | | | | 3,881 | |
(d) Depreciation | | | 768 | | | | 217 | | | | 2,093 | | | | 802 | |
(e) Provision for (benefit from) income taxes | | | 1,234 | | | | (1,711 | ) | | | 1,165 | | | | (1,711 | ) |
(f) Other expense (income), net | | | 192 | | | | (153 | ) | | | 47 | | | | (896 | ) |
| EBITDA (1), excluding goodwill impairment | | $ | 3,518 | | | $ | 2,790 | | | $ | 9,869 | | | $ | 9,669 | |
| Diluted EBITDA per common share | | $ | 0.07 | | | $ | 0.06 | | | $ | 0.20 | | | $ | 0.21 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares used in diluted EBITDA | | | | | | | | | | | | | | | | |
| per common share | | | 48,116,364 | | | | 50,384,112 | | | | 48,573,455 | | | | 46,814,080 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net (loss) income in accordance with generally | | | | | | | | | | | | | | | | |
| accepted accounting principles | | $ | (23,844 | ) | | $ | 2,404 | | | $ | (23,837 | ) | | $ | 5,821 | |
| Add: | | | | | | | | | | | | | | | | |
(a) Goodwill impairment | | | 23,501 | | | | - | | | | 23,501 | | | | - | |
(b) Amortization of intangibles | | | 579 | | | | 793 | | | | 2,634 | | | | 1,772 | |
(c) Stock-based compensation | | | 1,088 | | | | 1,240 | | | | 4,266 | | | | 3,881 | |
| Adjusted net income, excluding goodwill impairment | | $ | 1,324 | | | $ | 4,437 | | | $ | 6,564 | | | $ | 11,474 | |
| Diluted adjusted net income per common share | | $ | 0.03 | | | $ | 0.09 | | | $ | 0.14 | | | $ | 0.25 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares used in diluted adjusted net income | | | | | | | | | | | | | | | | |
| per common share | | | 48,116,364 | | | | 50,384,112 | | | | 48,573,455 | | | | 46,814,080 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| EBITDA, excluding impairment | | $ | 3,518 | | | $ | 2,790 | | | $ | 9,869 | | | $ | 9,669 | |
| Add/(less): | | | | | | | | | | | | | | | | |
(a) Changes in operating assets and liabilities | | | 703 | | | | 1,184 | | | | 364 | | | | 1,594 | |
(b) Provision for doubtful accounts | | | 80 | | | | 30 | | | | 148 | | | | 103 | |
(c) (Provision for) benefit from income taxes | | | (1,234 | ) | | | 1,711 | | | | (1,165 | ) | | | 1,711 | |
(d) Deferred income taxes | | | (1,145 | ) | | | (1,459 | ) | | | (1,184 | ) | | | (4,980 | ) |
(e) (Other expense) income, net | | | (192 | ) | | | 153 | | | | (47 | ) | | | 896 | |
| Net cash provided by operating activities | | $ | 1,730 | | | $ | 4,409 | | | $ | 7,985 | | | $ | 8,993 | |
| (1) | Earnings before interest, taxes, depreciation, amortization and stock-based compensation. |
LivePerson, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
Unaudited
| | | December 31,
2008 | | | December 31,
2007 | |
| | | | | | | |
| ASSETS | | | | | | |
| | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 25,500 | | | $ | 26,222 | |
| Accounts receivable, net | | | 7,574 | | | | 6,026 | |
| Prepaid expenses and other current assets | | | 1,853 | | | | 1,802 | |
| Deferred tax assets, net | | | 1,772 | | | | 42 | |
| Total current assets | | | 36,699 | | | | 34,092 | |
| | | | | | | | | |
| Property and equipment, net | | | 7,473 | | | | 3,733 | |
| Intangibles, net | | | 4,319 | | | | 6,953 | |
| Goodwill | | | 24,388 | | | | 51,684 | |
| Deferred tax assets, net | | | 7,330 | | | | 4,202 | |
| Security deposits | | | 349 | | | | 499 | |
| Other assets | | | 1,390 | | | | 1,325 | |
| Total assets | | $ | 81,948 | | | $ | 102,488 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 3,555 | | | $ | 3,067 | |
| Accrued expenses | | | 9,088 | | | | 9,191 | |
| Deferred revenue | | | 4,332 | | | | 4,000 | |
| Deferred tax liabilities, net | | | - | | | | 193 | |
| Total current liabilities | | | 16,975 | | | | 16,451 | |
| | | | | | | | | |
| Other liabilities | | | 1,390 | | | | 1,325 | |
| | | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| | | | | | | | | |
| Total stockholders' equity | | | 63,583 | | | | 84,712 | |
| Total liabilities and stockholders' equity | | $ | 81,948 | | | $ | 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.
