LIVEPERSON,
INC.
|
(Exact
Name of Registrant as Specified in Its
Charter)
|
DELAWARE
|
13-3861628
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(IRS
Employer Identification No.)
|
462
SEVENTH AVENUE
NEW
YORK, NEW YORK
|
10018
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
(212)
609-4200
|
(Registrant’s
Telephone Number, Including Area
Code)
|
(Check one). | Large accelerated filer o | Accelerated filer x | Non-accelerated filer o |
PAGE | |||
PART
I. FINANCIAL INFORMATION
|
4
|
||
ITEM
1. CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
|
4
|
||
CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2006 (UNAUDITED)
AND DECEMBER 31, 2005
|
4
|
||
|
|
||
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND NINE
MONTHS
ENDED
SEPTEMBER 30, 2006 AND 2005
|
5
|
||
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
|
6
|
||
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
7
|
||
ITEM
2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
|
17
|
||
|
|
||
ITEM
3. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
25
|
||
ITEM
4. CONTROLS
AND PROCEDURES
|
26
|
||
PART
II. OTHER INFORMATION
|
26
|
||
ITEM
1. LEGAL
PROCEEDINGS
|
26
|
||
ITEM
1A. RISK FACTORS
|
26
|
||
ITEM
6. EXHIBITS
|
27
|
September
30, 2006
|
December
31, 2005
|
||||||
(Unaudited)
|
(Note
1(B))
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
19,786
|
$
|
17,117
|
|||
Accounts
receivable, net of allowances for
doubtful accounts of $97 and $67 as of September 30, 2006
|
|||||||
and
December 31, 2005, respectively
|
3,593
|
1,727
|
|||||
Prepaid
expenses and other current assets
|
1,037
|
591
|
|||||
Deferred
tax assets
|
1,100
|
--
|
|||||
Total
current assets
|
25,516
|
19,435
|
|||||
Property
and equipment, net
|
1,121
|
575
|
|||||
Intangibles,
net
|
3,113
|
790
|
|||||
Goodwill
|
6,875
|
--
|
|||||
Security
deposits
|
283
|
180
|
|||||
Other
assets
|
612
|
446
|
|||||
Total
assets
|
$
|
37,520
|
$
|
21,426
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
544
|
$
|
346
|
|||
Accrued
expenses
|
3,468
|
1,803
|
|||||
Deferred
revenue
|
3,026
|
1,618
|
|||||
Total
current liabilities
|
7,038
|
3,767
|
|||||
Other
liabilities
|
612
|
446
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $.001 par value per share; 5,000,000 shares
authorized, 0 shares issued and outstanding
|
|||||||
at September
30, 2006 and December 31, 2005
|
--
|
--
|
|||||
Common
stock, $.001 par value per share; 100,000,000 shares
authorized, 40,962,192 shares issued and
|
|||||||
outstanding
at September 30, 2006 and 37,979,271 shares issued and outstanding
at
December 31, 2005
|
41
|
38
|
|||||
Additional
paid-in capital
|
130,262
|
118,556
|
|||||
Accumulated
deficit
|
(100,424
|
)
|
(101,381
|
)
|
|||
Accumulated
other comprehensive loss
|
(9
|
)
|
--
|
||||
Total
stockholders’ equity
|
29,870
|
17,213
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
37,520
|
$
|
21,426
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Revenue
|
$
|
8,881
|
$
|
5,724
|
$
|
23,174
|
$
|
15,960
|
|||||
Operating
expenses:
|
|||||||||||||
Cost
of revenue
|
2,142
|
1,114
|
5,246
|
2,997
|
|||||||||
Product
development
|
1,381
|
663
|
3,280
|
2,027
|
|||||||||
Sales
and marketing
|
3,104
|
1,715
|
8,605
|
4,889
|
|||||||||
General
and administrative
|
1,750
|
1,034
|
4,689
|
3,400
|
|||||||||
Amortization
of intangibles
|
447
|
232
|
911
|
699
|
|||||||||
Total
operating expenses
|
8,824
|
4,758
|
22,731
|
14,012
|
|||||||||
Income
from operations
|
57
|
966
|
443
|
1,948
|
|||||||||
Other
income:
|
|||||||||||||
Interest
income
|
200
|
81
|
514
|
184
|
|||||||||
Total
other income
|
200
|
81
|
514
|
184
|
|||||||||
Income
before provision for income taxes
|
257
|
1,047
|
957
|
2,132
|
|||||||||
Provision
for income taxes
|
--
|
358
|
--
|
738
|
|||||||||
Net
income
|
$
|
257
|
$
|
689
|
$
|
957
|
$
|
1,394
|
|||||
Basic
net income per common share
|
$
|
0.01
|
$
|
0.02
|
$
|
0.02
|
$
|
0.04
|
|||||
Diluted
net income per common share
|
$
|
0.01
|
$
|
0.02
|
$
|
0.02
|
$
|
0.04
|
|||||
Weighted average shares outstanding used in basic net income | |||||||||||||
per
common share calculation
|
40,547,309
|
37,555,696
|
39,242,174
|
37,492,285
|
|||||||||
Weighted average shares outstanding used in diluted net income | |||||||||||||
per
common share calculation
|
43,854,202
|
39,839,001
|
42,981,377
|
39,528,089
|
Nine
Months Ended
September
30,
|
|||||||
2006
|
2005
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income
|
$
|
957
|
$
|
1,394
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Stock-based
compensation expense
|
1,580
|
--
|
|||||
Depreciation
|
340
|
115
|
|||||
Loss
on disposal of fixed assets
|
111
|
--
|
|||||
Amortization
of intangibles
|
911
|
699
|
|||||
Tax
benefit from employee stock option exercises
|
--
|
697
|
|||||
Provision
for doubtful accounts, net
|
30
|
30
|
|||||
CHANGES
IN OPERATING ASSETS AND LIABILITIES (net of acquisition):
|
|||||||
Accounts
receivable
|
(1,646
|
)
|
129
|
||||
Prepaid
expenses and other current assets
|
(349
|
)
|
(92
|
)
|
|||
Security
deposits
|
(37
|
)
|
(4
|
)
|
|||
Accounts
payable
|
15
|
(104
|
)
|
||||
Accrued
expenses
|
(235
|
)
|
(291
|
)
|
|||
Deferred
revenue
|
541
|
371
|
|||||
Net
cash provided by operating activities
|
2,218
|
2,944
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchases
of property and equipment, including capitalized software
|
(434
|
)
|
(240
|
)
|
|||
Cash
acquired in Proficient acquisition
|
382
|
--
|
|||||
Acquisition
of intangible asset
|
(233
|
)
|
--
|
||||
Net
cash used in investing activities
|
(285
|
)
|
(240
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Proceeds
from issuance of common stock in connection with the exercise of
options
|
745
|
113
|
|||||
Net
cash provided by financing activities
|
745
|
113
|
|||||
Effect
of foreign exchange rate changes on cash and cash
equivalents
|
(9
|
)
|
--
|
||||
Net
increase in cash and cash equivalents
|
2,669
|
2,817
|
|||||
Cash
and cash equivalents at the beginning of the period
|
17,117
|
12,425
|
|||||
Cash
and cash equivalents at the end of the period
|
$
|
19,786
|
$
|
15,242
|
Supplemental
Disclosures:
|
|||||||
Cash
paid during the period for:
|
|||||||
Income
taxes
|
$
|
--
|
$
|
18
|
|||
Supplemental
Disclosure of non-cash investing activities:
|
|||||||
Value
of common stock issued for net assets of Proficient business
acquired
|
$
|
8,282
|
--
|
Three
Months Ended September 30, 2006
|
Nine
Months Ended September 30, 2006
|
||||||
Cost
of revenue
|
$
|
78
|
$
|
161
|
|||
Product
development expense
|
142
|
372
|
|||||
Sales
and marketing expense
|
197
|
492
|
|||||
General
and administrative expense
|
140
|
555
|
|||||
Total
stock based compensation included in operating expenses
|
$
|
557
|
$
|
1,580
|
Three
Months Ended September 30, 2006
|
||||
Dividend
yield
|
0.0
|
%
|
||
Risk-free
interest rate
|
4.8
|
%
|
||
Expected
life (in years)
|
4
|
|||
Historical
volatility
|
78.0
|
%
|
Three
Months Ended September 30, 2005
|
Nine
Months Ended September 30, 2005
|
||||||
Net
income as reported
|
$
|
689
|
$
|
1,394
|
|||
Deduct:
Pro forma stock-based compensation cost
|
$
|
(493
|
)
|
$
|
(1,501
|
)
|
|
Pro
forma net (loss)
|
$
|
196
|
$
|
(107
|
)
|
||
Basic
net income (loss) per common share:
|
|||||||
As
reported
|
$
|
0.02
|
$
|
0.04
|
|||
Pro
forma
|
$
|
0.01
|
$
|
(0.00
|
)
|
||
Diluted
net income (loss) per common share:
|
|||||||
As
reported
|
$
|
0.02
|
$
|
0.04
|
|||
Pro
forma
|
$
|
0.00
|
$
|
(0.00
|
)
|
Options
|
Weighted
Average
Exercise Price
|
||||||
Options
outstanding at December 31, 2005
|
8,300,053
|
$
|
2.16
|
||||
Options
granted
|
1,078,500
|
$
|
5.19
|
||||
Options
exercised
|
(983,507
|
)
|
$
|
0.77
|
|||
Options
cancelled
|
(267,875
|
)
|
$
|
2.13
|
|||
Options
outstanding at September 30, 2006
|
8,127,171
|
$
|
2.71
|
||||
Options
exercisable at September 30, 2006
|
4,321,546
|
$
|
2.13
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||
Exercise
Price
|
Number
Outstanding
|
Weighted
Average Remaining Contractual Life
|
Weighted
Average Exercise Price
|
Number
Outstanding
|
Weighted
Average Exercise Price
|
|||||||||||
$0.00-$1.00
|
2,228,232
|
5.33
|
$
|
0.58
|
1,774,607
|
$
|
0.54
|
|||||||||
$1.01-$2.00
|
1,081,949
|
5.83
|
$
|
1.95
|
751,949
|
$
|
1.95
|
|||||||||
$2.01-$5.00
|
3,932,365
|
8.05
|
$
|
3.29
|
1,408,365
|
$
|
2.96
|
|||||||||
$5.01-$11.00
|
884,625
|
7.16
|
$
|
6.45
|
386,625
|
$
|
6.69
|
|||||||||
8,127,171
|
4,321,546
|
Shares
|
Weighted
Average
Grant-Date Fair Value
|
||||||
Nonvested
Shares at January 1, 2006
|
3,827,250
|
$
|
1.65
|
||||
Granted
|
1,078,500
|
$
|
3.17
|
||||
Vested
|
(946,000
|
)
|
$
|
2.44
|
|||
Cancelled
|
(154,125
|
)
|
$
|
2.12
|
|||
Nonvested
Shares at September 30, 2006
|
3,805,625
|
$
|
3.38
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Basic
|
40,547,309
|
37,555,696
|
39,242,174
|
37,492,285
|
|||||||||
Effect
of assumed exercised options/warrants
|
3,306,893
|
2,283,305
|
3,739,203
|
2,035,804
|
|||||||||
Diluted
|
43,854,202
|
39,839,001
|
42,981,377
|
39,528,089
|
September
30, 2006
|
December
31, 2005
|
||||||
(Unaudited)
|
|||||||
Computer
equipment and software
|
$
|
4,551
|
$
|
1,936
|
|||
Furniture,
equipment and building improvements
|
367
|
182
|
|||||
4,918
|
2,118
|
||||||
Less
accumulated depreciation
|
3,797
|
1,543
|
|||||
Total
|
$
|
1,121
|
$
|
575
|
September
30, 2006
|
December
31, 2005
|
||||||
(Unaudited)
|
|||||||
Payroll
and related costs
|
$
|
1,829
|
$
|
1,182
|
|||
Professional
services and consulting fees
|
539
|
461
|
|||||
Restructuring
charges
|
571
|
--
|
|||||
Sales
commissions
|
272
|
99
|
|||||
Interest
expense
|
149
|
--
|
|||||
Other
|
108
|
61
|
|||||
Total
|
$
|
3,468
|
$
|
1,803
|
Cash
|
$
|
382
|
||
Accounts
receivable
|
250
|
|||
Other
currents assets
|
97
|
|||
Property
and equipment
|
563
|
|||
Other
assets
|
66
|
|||
Intangible
assets
|
3,000
|
|||
Goodwill
|
6,875
|
|||
11,233
|
||||
Liabilities
assumed
|
(697
|
)
|
||
Deferred
revenue
|
(867
|
)
|
||
Restructuring
liability
|
(933
|
)
|
||
Total
purchase price consideration
|
$
|
8,736
|
Weighted
Average Useful Life (months)
|
Amount
|
||||||
Customer
contracts
|
36
|
$
|
2,400,000
|
||||
Technology
|
18
|
500,000
|
|||||
Non-compete
agreements
|
24
|
100,000
|
|||||
$
|
3,000,000
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Revenue
|
$
|
9,158
|
$
|
6,198
|
$
|
25,159
|
$
|
17,678
|
|||||
Net
loss
|
$
|
(6
|
)
|
$
|
(693
|
)
|
$
|
(2,166
|
)
|
$
|
(2,409
|
)
|
|
Basic
and diluted net loss per common share
|
$
|
(0.00
|
)
|
$
|
(0.02
|
)
|
$
|
(0.06
|
)
|
$
|
(0.06
|
)
|
|
Weighted
average shares outstanding - basic and diluted
|
42,546,723
|
39,555,110
|
41,241,588
|
39,491,699
|
· |
compensation
costs relating to employees who provide customer support and
implementation services to our
clients;
|
· |
compensation
costs relating to our network support
staff;
|
· |
allocated
occupancy costs and related overhead;
and
|
· |
the
cost of supporting our infrastructure, including expenses related
to
server leases, infrastructure support costs and Internet connectivity,
as
well as depreciation of certain hardware and
software.
|
Payments
due by period
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||
Contractual
Obligations
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
|||||||||||
Operating
leases
|
$
|
4,644
|
$
|
432
|
$
|
3,317
|
$
|
895
|
$
|
—
|
||||||
Total
|
$
|
4,644
|
$
|
432
|
$
|
3,317
|
$
|
895
|
$
|
—
|
31.1
|
Certification
by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certification
by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
Certification
by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
LIVEPERSON, INC. | ||
(Registrant) | ||
|
|
|
Date: November 9, 2006 | By: | /s/ ROBERT P. LOCASCIO |
Name:
Robert
P. LoCascio
|
||
Title: Chief Executive Officer (duly authorized officer) |
Date: November 9, 2006 | By: | /s/ TIMOTHY E. BIXBY |
Name:
Timothy
E. Bixby
|
||
Title:
President,
Chief Financial Officer and Secretary (principal financial and accounting
officer)
|
31.1
|
Certification
by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certification
by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
Certification
by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|