Quarterly Revenue Increases 8% from Prior Quarter; Company Begins Integration of Proficient Systems Acquisition
NEW YORK, NY – August 3, 2006 – LivePerson, Inc. (Nasdaq: LPSN), a provider of online conversion solutions, today announced financial results for the second quarter ended June 30, 2006.
Revenue for the second quarter was $7.4 million, a 40% increase from the second quarter of 2005, and an 8% sequential increase as compared to the first quarter of 2006. Revenue growth was due primarily to continuing strong sales of TimpaniTM Sales & Marketing to new and existing customers, as well as solid growth in sales of LivePerson Pro and Contact Center to small and mid-size businesses. Timpani Sales & Marketing analyzes website traffic in real time, enabling LivePerson clients to proactively engage high-value buyers based on their shopping behavior, thereby increasing online customer conversion rates.
“We are very pleased with the results for the quarter,” CEO Robert LoCascio said. “We are continuing to see positive results from our increase in sales and marketing investment over the past nine months, especially in signed enterprise contracts that will impact future quarters. As a result, we expect 10-11% sequential organic revenue growth in the third quarter. We also recently announced the closing of the acquisition of Proficient Systems. We have begun to integrate our two companies and are very optimistic about our ability to deliver solutions to new and existing customers.”
The company’s updated full year revenue guidance represents 45% annual revenue growth; of which 40% is organic growth. The company’s prior revenue guidance indicated an expected annual revenue growth rate of approximately 35%.
LivePerson signed several new blue-chip clients during the quarter, including Netquote, IDT, and New Line Cinema, and expanded business with several existing customers, including Charles Schwab and Qwest.
Net income for the second quarter of 2006 was $0.4 million or $0.01 per share, unchanged as compared to the second quarter of 2005. Included in these figures for the three months ended June 30, 2006 is the impact of amortization of stock-based compensation expense of $0.4 million related to the adoption of SFAS No. 123(R). There was no stock-based compensation expense in the three months ended June 30, 2005 as the company was not required to adopt SFAS No. 123(R) until January 1, 2006.
Earnings before interest, taxes, depreciation, amortization and stock-based compensation (EBITDA) for the second quarter of 2006 was $1.0 million as compared to $0.8 million in the second quarter of 2005 and $1.0 million in the first quarter of 2006.
The company’s cash balance was unchanged at $19.1 million at June 30, 2006 as compared to the prior quarter. An increase in cash from operations of $0.4 million in the quarter was offset by the cash impact of capital expenditures and one-time capital costs related to expansion within the UK.
The company reduced its valuation allowance against deferred tax assets resulting in an effective tax rate of zero for the six months ended June 30, 2006.
The difference between EBITDA per share, a non-GAAP measure, and GAAP EPS, is interest, taxes, depreciation, amortization and stock-based compensation.
A reconciliation of the differences between EBITDA and the most comparable financial measure calculated and presented in accordance with generally accepted accounting principles (GAAP) is located under the heading “Reconciliation of Non-GAAP Financial Information to GAAP” immediately following the Condensed Consolidated Statements of Income included in this press release.
LivePerson considers EBITDA and cash from operations to be important financial indicators of the company`s operational strength and the performance of its business. EBITDA should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure in the table below.
Financial Expectations
The company currently expects the following financial results:
• Revenue of $8.15-$8.25 million for the third quarter of 2006 (10-11% sequential quarterly revenue growth), excluding the revenue impact of the Proficient acquisition
• Revenue from the Proficient acquisition of $0.5 million for the third quarter of 2006, effective as of the transaction closing date of July 18, 2006
• Total revenue of $8.6-$8.7 million for the third quarter of 2006
• EBITDA of $0.03 per share and GAAP EPS of $0.01 for the third quarter of 2006
• Revenue of $32.2-$32.8 million for the full year 2006
• EBITDA of $0.13 per share and GAAP EPS of $0.04 for the full year 2006
• GAAP EPS expectations include additional expense of $0.01 per share per quarter for amortization of intangible assets related to the Proficient acquisition
• Share count will increase by approximately 2 million shares due to the Proficient acquisition during the third quarter, and may increase by up to 2.05 million additional shares during the second quarter of 2007 based upon the revenue earn out provisions related to the acquisition of Proficient Systems
GAAP EPS expectations include the estimated impact of a change in accounting policy related to adopting SFAS No. 123(R) as of January 1, 2006. The additional expense related to this change is expected to be $0.05 per share and $0.01 per share, for the full year 2006 and the third quarter of 2006, respectively, based upon the unamortized balance of stock-based compensation expense as of June 30, 2006 and the expected impact on stock-based compensation of the Proficient acquisition. This impact may change based upon additional stock option grants, if any, methodology refinement or other factors.
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