[General Information](index=1&type=section&id=General%20Information) [Filing Information](index=1&type=section&id=Filing%20Information) Details LivePerson, Inc.'s Form 10-Q filing for Q1 2022, covering registration, stock exchange listing, and filer status - The registrant is **LIVEPERSON, INC.**, a **Delaware corporation**, filing its **Quarterly Report on Form 10-Q** for the period ended **March 31, 2022**[2](index=2&type=chunk) - The company's **Common Stock**, **par value** **$0.001 per share**, is traded on **The Nasdaq Stock Market LLC**[3](index=3&type=chunk) - **LivePerson, Inc.** is classified as a **Large Accelerated Filer**[4](index=4&type=chunk) - As of **May 2, 2022**, **74.4 million shares** of the registrant's **common stock** were outstanding[4](index=4&type=chunk) [Forward-Looking Statements](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) Outlines forward-looking statements, emphasizing reliance on current expectations and susceptibility to material risks and uncertainties - Statements in this report that are not historical facts are **forward-looking**, based on current expectations, assumptions, estimates, and projections about **LivePerson** and its industry[9](index=9&type=chunk) - **Forward-looking statements** are subject to **risks and uncertainties** that could cause actual future events or results to differ materially, including those detailed in the **Annual Report on Form 10-K**[9](index=9&type=chunk) [PART I. Financial Information](index=4&type=section&id=PART%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents LivePerson, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with explanatory notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | March 31, 2022 (In thousands) | December 31, 2021 (In thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $1,204,073 | $1,186,656 | | Total Liabilities | $1,023,727 | $837,219 | | Total Stockholders' Equity | $180,346 | $349,437 | | Cash and cash equivalents | $480,676 | $521,846 | | Convertible senior notes, net | $734,586 | $574,238 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended March 31, 2022 (In thousands) | Three Months Ended March 31, 2021 (In thousands) | Change (YoY) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :------------ | | Revenue | $130,197 | $107,891 | +20.7% | | Total costs and expenses | $195,324 | $121,520 | +60.7% | | Loss from operations | $(65,127) | $(13,629) | -377.9% | | Net loss | $(65,364) | $(21,195) | -208.4% | | Basic Net loss per share | $(0.86) | $(0.31) | -177.4% | | Diluted Net loss per share | $(0.86) | $(0.31) | -177.4% | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) | Metric | Three Months Ended March 31, 2022 (In thousands) | Three Months Ended March 31, 2021 (In thousands) | Change (YoY) | | :----------------------- | :------------------------------------- | :------------------------------------- | :------------ | | Net loss | $(65,364) | $(21,195) | -208.4% | | Foreign currency translation adjustment | $(1,699) | $(1,746) | +2.7% | | Comprehensive loss | $(67,063) | $(22,941) | -192.3% | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) | Metric | December 31, 2021 (In thousands) | March 31, 2022 (In thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $349,437 | $180,346 | | Cumulative adjustment due to adoption of ASU 2020-06 | N/A | $(159,407) | | Net loss | N/A | $(65,364) | | Stock-based compensation | N/A | $20,522 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric | Three Months Ended March 31, 2022 (In thousands) | Three Months Ended March 31, 2021 (In thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Net cash (used in) provided by operating activities | $(22,872) | $25,229 | | Net cash used in investing activities | $(19,899) | $(11,437) | | Net cash provided by financing activities | $1,001 | $3,015 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(41,170) | $14,073 | | Cash, cash equivalents, and restricted cash - end of year | $482,362 | $668,225 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Description of Business and Basis of Presentation](index=10&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) LivePerson, a Conversational AI company, presents unaudited GAAP financials, with ASU 2020-06 impacting convertible instrument accounting - **LivePerson** is a leading **Conversational Artificial Intelligence (AI) company**, creating digital experiences that are 'Curiously Human' through its **Conversational Cloud platform** for businesses and an online marketplace for consumer services[24](index=24&type=chunk)[25](index=25&type=chunk)[28](index=28&type=chunk) - The company adopted **ASU 2020-06** on **January 1, 2022**, which simplifies the accounting for **convertible instruments**. This resulted in a **$50.2 million** decrease in **accumulated deficit**, a **$209.7 million** decrease in **additional paid-in capital**, and a **$159.5 million** increase in **convertible senior notes**, net[48](index=48&type=chunk) [Note 2. Revenue Recognition](index=15&type=section&id=Note%202.%20Revenue%20Recognition) Revenue primarily from hosted services (Business segment), recognized over time, with total revenue increasing 21% year-over-year to $130.2 million | Revenue Source | Three Months Ended March 31, 2022 (In thousands) | Three Months Ended March 31, 2021 (In thousands) | Change (YoY) | | :-------------------------- | :------------------------------------- | :------------------------------------- | :------------ | | Hosted services – Business | $106,324 | $83,640 | +27.1% | | Hosted services – Consumer | $9,122 | $9,011 | +1.2% | | Professional services – Business | $14,751 | $15,240 | -3.1% | | **Total revenue** | **$130,197** | **$107,891** | **+20.7%** | | Geographic Location | Three Months Ended March 31, 2022 (In thousands) | Three Months Ended March 31, 2021 (In thousands) | Change (YoY) | | :------------------ | :------------------------------------- | :------------------------------------- | :------------ | | United States | $87,137 | $68,782 | +26.7% | | Other Americas | $5,039 | $3,913 | +28.8% | | EMEA | $23,820 | $21,760 | +9.5% | | APAC | $14,201 | $13,436 | +5.7% | | **Total revenue** | **$130,197** | **$107,891** | **+20.7%** | - As of **March 31, 2022**, the aggregate amount of the total transaction price allocated to **remaining performance obligations** for contracts with an original duration of one year or greater was **$448.0 million**, with approximately **91%** expected to be recognized within the next **24 months**[51](index=51&type=chunk) | Deferred Revenue | March 31, 2022 (In thousands) | December 31, 2021 (In thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Total deferred revenue - short term | $112,323 | $98,808 | | Total deferred revenue - long term | $188 | $54 | [Note 3. Net Loss Per Share](index=17&type=section&id=Note%203.%20Net%20Loss%20Per%20Share) Basic and diluted net loss per share for Q1 2022 was $(0.86), a significant increase from $(0.31) in the prior year, with anti-dilutive securities excluded | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss (in thousands) | $(65,364) | $(21,195) | | Weighted average shares outstanding, basic and diluted | 75,812,405 | 67,901,809 | | Net loss per share, basic and diluted | $(0.86) | $(0.31) | | Anti-Dilutive Securities (as of March 31) | 2022 | 2021 | | :--------------------------------------- | :--------- | :--------- | | Shares subject to outstanding common stock options and employee stock purchase plan | 5,027,605 | 4,172,765 | | Restricted stock units | 4,292,153 | 2,530,542 | | Conversion option of the 2024 Notes | 5,961,186 | 5,961,186 | | Conversion option of the 2026 Notes | 6,879,283 | 6,879,283 | | **Total Anti-Dilutive Securities** | **22,160,227** | **19,543,776** | [Note 4. Segment Information](index=18&type=section&id=Note%204.%20Segment%20Information) Business segment revenue increased 22% to $121.1 million, but operating income decreased significantly, while Consumer segment revenue remained stable | Metric (Three Months Ended March 31, 2022) | Business (In thousands) | Consumer (In thousands) | Corporate (In thousands) | Consolidated (In thousands) | | :--------------------------------------- | :---------------------- | :---------------------- | :----------------------- | :-------------------------- | | Total revenue | $121,075 | $9,122 | $0 | $130,197 | | Cost of revenue | $48,221 | $1,346 | $0 | $49,567 | | Sales and marketing | $52,283 | $5,849 | $0 | $58,132 | | Amortization of purchased intangibles | $1,841 | $0 | $0 | $1,841 | | Unallocated corporate expenses | $0 | $0 | $85,784 | $85,784 | | Operating income (loss) | $18,730 | $1,927 | $(85,784) | $(65,127) | | Metric (Three Months Ended March 31, 2021) | Business (In thousands) | Consumer (In thousands) | Corporate (In thousands) | Consolidated (In thousands) | | :--------------------------------------- | :---------------------- | :---------------------- | :----------------------- | :-------------------------- | | Total revenue | $98,880 | $9,011 | $0 | $107,891 | | Cost of revenue | $31,610 | $1,909 | $0 | $33,519 | | Sales and marketing | $30,203 | $6,750 | $0 | $36,953 | | Amortization of purchased intangibles | $375 | $0 | $0 | $375 | | Unallocated corporate expenses | $0 | $0 | $50,672 | $50,672 | | Operating income (loss) | $36,692 | $352 | $(50,672) | $(13,629) | | Long-Lived Assets by Geographic Region | March 31, 2022 (In thousands) | December 31, 2021 (In thousands) | | :----------------------------------- | :----------------------------- | :----------------------------- | | United States | $429,761 | $444,318 | | Germany | $96,885 | $52,342 | | Israel | $21,430 | $20,754 | | Australia | $13,094 | $12,771 | | Netherlands | $6,948 | $4,566 | | Other | $16,644 | $15,629 | | **Total long-lived assets** | **$584,762** | **$550,380** | [Note 5. Goodwill and Intangible Assets](index=19&type=section&id=Note%205.%20Goodwill%20and%20Intangible%20Assets) Goodwill increased by $15.3 million to $305.4 million, and total intangible assets, net, rose to $90.2 million, with increased amortization expense | Goodwill | December 31, 2021 (In thousands) | March 31, 2022 (In thousands) | | :----------------------- | :----------------------------- | :----------------------------- | | Business Segment | $283,191 | $282,111 | | Consumer Segment | $8,024 | $23,315 | | **Consolidated Total** | **$291,215** | **$305,426** | | Intangible Assets (Net Carrying Amount) | March 31, 2022 (In thousands) | December 31, 2021 (In thousands) | | :------------------------------------- | :----------------------------- | :----------------------------- | | Technology | $63,272 | $59,869 | | Customer relationships | $16,374 | $16,998 | | Patents | $7,688 | $6,851 | | Trademarks | $1,232 | $1,339 | | Trade names | $942 | $417 | | Other | $674 | $80 | | **Total Intangibles, net** | **$90,182** | **$85,554** | - **Aggregate amortization expense** for **intangible assets** was **$4.4 million** for the three months ended **March 31, 2022**, a significant increase from **$1.6 million** for the comparable period in **2021**[73](index=73&type=chunk) [Note 6. Property and Equipment](index=20&type=section&id=Note%206.%20Property%20and%20Equipment) Total property and equipment, net, increased to $131.8 million, driven by computer equipment and internal-use software development costs | Property and Equipment | March 31, 2022 (In thousands) | December 31, 2021 (In thousands) | | :------------------------------------- | :----------------------------- | :----------------------------- | | Computer equipment and software | $125,609 | $120,685 | | Internal-use software development costs | $132,279 | $122,479 | | Finance lease right of use assets | $5,896 | $6,797 | | Furniture, equipment, and building improvements | $550 | $258 | | Less: accumulated depreciation | $(132,568) | $(125,493) | | **Total Property and Equipment, net** | **$131,766** | **$124,726** | [Note 7. Accrued Expenses and Other Current Liabilities](index=21&type=section&id=Note%207.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Total accrued expenses and other current liabilities increased to $106.8 million, with professional services and consulting fees remaining the largest component | Accrued Expenses and Other Current Liabilities | March 31, 2022 (In thousands) | December 31, 2021 (In thousands) | | :--------------------------------------------- | :----------------------------- | :----------------------------- | | Professional services and consulting and other vendor fees | $60,957 | $58,811 | | Payroll and other employee related costs | $17,926 | $29,855 | | Short-term contingent earn-out | $12,234 | $0 | | Sales commissions | $4,294 | $4,269 | | Finance lease liability | $3,781 | $3,738 | | Unrecognized tax benefits | $2,377 | $2,424 | | Restructuring | $1,603 | $1,694 | | Taxes other than income tax | $1,195 | $918 | | Other | $2,411 | $2,588 | | **Total** | **$106,778** | **$104,297** | [Note 8. Convertible Senior Notes and Capped Call Transactions](index=21&type=section&id=Note%208.%20Convertible%20Senior%20Notes%20and%20Capped%20Call%20Transactions) The company's $230.0 million 2024 Notes and $517.5 million 2026 Notes are now single liabilities, increasing their net carrying amount to $734.6 million - The company issued **$230.0 million** **aggregate principal amount** of **0.750% Convertible Senior Notes due 2024** (**2024 Notes**) and **$517.5 million** **aggregate principal amount** of **0% Convertible Senior Notes due 2026** (**2026 Notes**)[77](index=77&type=chunk)[87](index=87&type=chunk) - The **2024 Notes** are initially **convertible at** **$38.58 per share**, and the **2026 Notes** at **$75.23 per share**[79](index=79&type=chunk)[90](index=90&type=chunk) - After the adoption of **ASU 2020-06**, the **2024 Notes** and **2026 Notes** are accounted for as **single liabilities**. Their **net carrying amounts** as of **March 31, 2022**, were **$226.6 million** and **$507.9 million**, respectively[85](index=85&type=chunk)[97](index=97&type=chunk) | Metric | March 31, 2022 (In thousands) | December 31, 2021 (In thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Principal | $747,500 | $747,500 | | Unamortized discount | $0 | $(162,500) | | Unamortized issuance costs | $(12,914) | $(10,762) | | **Net carrying amount** | **$734,586** | **$574,238** | | Interest Expense | Three Months Ended March 31, 2022 (In thousands) | Three Months Ended March 31, 2021 (In thousands) | | :-------------------------- | :------------------------------------- | :------------------------------------- | | Contractual interest expense | $431 | $431 | | Amortization of issuance costs | $941 | $609 | | Amortization of debt discount | $0 | $8,118 | | **Total interest expense** | **$1,372** | **$9,158** | [Note 9. Acquisitions](index=25&type=section&id=Note%209.%20Acquisitions) LivePerson acquired WildHealth, Inc. for $22.3 million, aiming to accelerate healthcare offerings, resulting in $15.3 million goodwill and $8.3 million intangible assets - In **February 2022**, **LivePerson** acquired **100%** of **WildHealth, Inc.** for a total **purchase price** of **$22.3 million**, consisting of approximately **$4.6 million** in **cash** and **$17.7 million** in **common stock**[101](index=101&type=chunk) - The **acquisition** is part of **LivePerson's** strategy to accelerate its **technology-driven healthcare offerings** by combining a rich healthcare data platform with **Conversational AI**[101](index=101&type=chunk) | Acquisition Impact (WildHealth, Inc.) | Amount (In thousands) | | :------------------------------------ | :-------------------- | | Total acquisition consideration | $22,265 | | Goodwill | $15,301 | | Intangible assets acquired | $8,300 | | Deferred tax liability | $(1,603) | | Intangible Assets Acquired (WildHealth) | Fair Value (In thousands) | Useful life | | :-------------------------------------- | :------------------------ | :---------- | | Developed technology | $7,100 | 5.0 years | | Trade name | $600 | 5.0 years | | Fellowship content | $600 | 5.0 years | | **Total** | **$8,300** | | [Note 10. Leases](index=26&type=section&id=Note%2010.%20Leases) The company holds operating and finance leases for offices, with total lease cost for Q1 2022 at $4.0 million and total lease liabilities at $7.7 million | Lease Metrics | March 31, 2022 (In thousands) | December 31, 2021 (In thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating right of use assets | $4,085 | $1,977 | | Finance right of use assets | $5,896 | $6,797 | | Operating lease liability (current) | $4,864 | $3,380 | | Finance lease liability (current) | $3,781 | $3,738 | | Operating lease liability (non-current) | $2,795 | $2,733 | | Finance lease liability (non-current) | $1,829 | $2,780 | | Lease Cost (Three Months Ended March 31) | 2022 (In thousands) | 2021 (In thousands) | | :--------------------------------------- | :------------------ | :------------------ | | Finance lease cost (Amortization + Interest) | $976 | $982 | | Operating lease cost | $3,002 | $1,857 | | **Total lease cost** | **$3,978** | **$2,839** | | Future Minimum Lease Payments (March 31, 2022) | Operating Leases (In thousands) | Finance Leases (In thousands) | | :--------------------------------------------- | :------------------------------ | :---------------------------- | | 2022 (remaining nine months) | $4,188 | $2,955 | | 2023 | $2,744 | $2,627 | | 2024 | $512 | $127 | | 2025 | $608 | $95 | | 2026 | $263 | $0 | | **Total minimum lease payments** | **$8,315** | **$5,804** | [Note 11. Fair Value Measurements](index=29&type=section&id=Note%2011.%20Fair%20Value%20Measurements) Cash equivalents are measured at Level 1, contingent earn-out liabilities at Level 3, and convertible senior notes at Level 2 fair value | Fair Value Item (March 31, 2022) | Level 1 (In thousands) | Level 2 (In thousands) | Level 3 (In thousands) | Total (In thousands) | | :------------------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | Money market funds | $392,703 | $0 | $0 | $392,703 | | Contingent earn-out | $0 | $0 | $42,456 | $42,456 | - As of **March 31, 2022**, the **fair value** of the **Convertible Senior Notes** was approximately **$622.7 million**, determined using an **independent valuation specialist** with the **antithetic variable technique** (**Level 2 fair value measurement**)[121](index=121&type=chunk) [Note 12. Commitments and Contingencies](index=31&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) The company contributes to a 401(k) plan, with sales tax liabilities accrued at $1.1 million as of March 31, 2022 | Employee Benefit Plan (401k) | Three Months Ended March 31, 2022 (In thousands) | Three Months Ended March 31, 2021 (In thousands) | | :--------------------------- | :------------------------------------- | :------------------------------------- | | Employer matching contributions | $1,600 | $900 | - As of **March 31, 2022**, the accrual balance for **sales tax liabilities** was **$1.1 million**, a decrease from the initial **$2.5 million** accrued as of **March 31, 2020**, due to payments made[126](index=126&type=chunk) [Note 13. Stockholders' Equity](index=31&type=section&id=Note%2013.%20Stockholders'%20Equity) As of March 31, 2022, 74.3 million common shares were outstanding, with Q1 2022 stock-based compensation expense at $31.9 million | Common Stock (as of March 31, 2022) | Shares | | :---------------------------------- | :--------- | | Authorized | 200,000,000 | | Issued | 77,062,637 | | Outstanding | 74,316,394 | | Stock Option Activity (March 31, 2022) | Options (In thousands) | Weighted Average Exercise Price | | :------------------------------------- | :--------------------- | :------------------------------ | | Balance outstanding at December 31, 2021 | 4,782 | $27.52 | | Granted | 445 | $28.73 | | Exercised | (40) | $12.50 | | Cancelled or expired | (159) | $47.31 | | **Balance outstanding at March 31, 2022** | **5,028** | **$27.24** | | Restricted Stock Unit Activity (March 31, 2022) | Number of Shares (In thousands) | Weighted Average Grant Date Fair Value (Per share) | | :---------------------------------------------- | :------------------------------ | :----------------------------------------------- | | Balance outstanding at December 31, 2021 | 3,732 | $43.63 | | Awarded | 2,049 | $24.87 | | Vested | (1,180) | $24.58 | | Forfeited | (309) | $41.16 | | **Non-vested and outstanding at March 31, 2022** | **4,292** | **$40.10** | | Stock-Based Compensation Expense | Three Months Ended March 31, 2022 (In thousands) | Three Months Ended March 31, 2021 (In thousands) | | :------------------------------- | :------------------------------------- | :------------------------------------- | | Total expense | $31,866 | $14,611 | [Note 14. Restructuring](index=34&type=section&id=Note%2014.%20Restructuring) Restructuring costs decreased significantly to less than $0.1 million for Q1 2022, with a $1.6 million liability primarily for lease restructuring | Restructuring Costs | Three Months Ended March 31, 2022 (In thousands) | Three Months Ended March 31, 2021 (In thousands) | Change (YoY) | | :-------------------------- | :------------------------------------- | :------------------------------------- | :------------ | | Lease restructuring costs | $(23) | $294 | -107.8% | | Severance and other compensation associated costs | $0 | $2,438 | -100% | | **Total restructuring costs** | **$(23)** | **$2,732** | **-100.8%** | | Restructuring Liability | March 31, 2022 (In thousands) | December 31, 2021 (In thousands) | | :---------------------- | :----------------------------- | :----------------------------- | | Balance, end of period | $1,603 | $1,694 | [Note 15. Legal Matters](index=35&type=section&id=Note%2015.%20Legal%20Matters) A jury awarded LivePerson $30.3 million in an intellectual property suit, but no amounts are reflected due to anticipated challenges - A jury awarded **LivePerson** approximately **$30.3 million** in an **intellectual property suit** against **[24]7 Customer, Inc.** in **May 2021**, including **$6.7 million** in **compensatory damages** and **$23.6 million** in **punitive damages**[145](index=145&type=chunk) - The company believes the remaining claims filed by **[24]7** are without merit and intends to defend them vigorously. No amounts for the **settlement** have been reflected in the **financial statements** due to anticipated challenges[145](index=145&type=chunk) [Note 16. Income Taxes](index=35&type=section&id=Note%2016.%20Income%20Taxes) The company recorded a $0.2 million tax benefit for Q1 2022, with a $107.1 million valuation allowance against deferred tax assets - For the three months ended **March 31, 2022**, the company recorded a **tax benefit** of **$0.2 million**, which includes a tax provision on operating earnings, a stock compensation tax deficiency, and a tax benefit from the release of **valuation allowance** due to the **WildHealth acquisition**[149](index=149&type=chunk) - As of **December 31, 2021**, the company had a **valuation allowance** of **$107.1 million** on certain **deferred tax assets**, with an estimated increase of **$28.7 million** inherent in the **2022** annual effective tax rate[150](index=150&type=chunk) [Note 17. Equity Method Investments](index=36&type=section&id=Note%2017.%20Equity%20Method%20Investments) LivePerson entered a joint venture with Pasaca Capital Inc. to form Claire Holdings, Inc., with a $2.8 million equity method investment - **LivePerson** and **Pasaca Capital Inc.** entered into a **joint venture** agreement to form **Claire Holdings, Inc.**, a marketplace for health and well-being diagnostic testing. **LivePerson** will contribute **$19.0 million** over **five years** for a **19.2% ownership interest**[151](index=151&type=chunk) - As of **March 31, 2022**, the company's **equity method investment** in **Claire Holdings, Inc.** was **$2.8 million**[152](index=152&type=chunk) [Note 18. Variable Interest Entity](index=36&type=section&id=Note%2018.%20Variable%20Interest%20Entity) Through the WildHealth acquisition, LivePerson consolidated four Physician Corporations (PCs) as VIEs, with WildHealth as the primary beneficiary - In **February 2022**, **LivePerson** acquired **WildHealth**, which consolidates four **Physician Corporations (PCs)** as **Variable Interest Entities (VIEs)**. **WildHealth** is determined to be the **primary beneficiary** of the **PCs**[154](index=154&type=chunk) - The assets, liabilities, revenues, and operating results of the consolidated **VIEs** were not material as of and for the three months ended **March 31, 2022**[156](index=156&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses LivePerson's Q1 2022 financial performance, highlighting revenue growth, increased expenses, and net loss [General](index=37&type=section&id=General) Discussion and analysis are based on GAAP condensed consolidated financial statements, requiring management estimates and assumptions influenced by the COVID-19 pandemic - The discussion and analysis are based on condensed consolidated financial statements prepared in conformity with **GAAP**, requiring management to make estimates and assumptions that may be affected by the **COVID-19 pandemic**[158](index=158&type=chunk) [Overview](index=37&type=section&id=Overview) LivePerson, a Conversational AI company, leverages its platform for business-consumer engagement, focusing on strategic growth, AI talent, and technology integration - **LivePerson** is a leading **Conversational AI company**, leveraging its **Conversational Cloud platform** to enable businesses to engage with consumers through preferred conversational interfaces (e.g., Facebook Messenger, SMS, WhatsApp)[160](index=160&type=chunk)[161](index=161&type=chunk) - Key **strategic elements** include building awareness for the **Conversational Space**, increasing messaging volumes through a broad ecosystem and **AI/automation**, attracting **top AI talent**, and bringing **best-in-class AI/machine learning technologies** to market[170](index=170&type=chunk)[172](index=172&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - The company's offerings have led to **significant benefits** for customers, including agents managing up to **40 messaging conversations** simultaneously, labor efficiency gains of at least **two times**, and increases in **customer satisfaction** and **sales conversion** by up to **20%**[167](index=167&type=chunk) - **Strategic acquisitions** in **2021-2022** (e-bot7, VoiceBase, Tenfold, **WildHealth**) aim to enhance **self-service capabilities**, real-time speech recognition, conversational analytics, and **technology-driven healthcare offerings**, integrating **AI and automation** across all channels[195](index=195&type=chunk) [Key Metrics](index=43&type=section&id=Key%20Metrics) Total revenue increased 21% to $130.2 million, with gross profit margin at 62% and a net loss of $(65.4) million for Q1 2022 | Financial Overview (Three Months Ended March 31) | 2022 (In millions) | 2021 (In millions) | Change (YoY) | | :----------------------------------------------- | :----------------- | :----------------- | :----------- | | Total revenue | $130.2 | $107.9 | +21% | | Revenue from Business segment | $121.1 | $98.9 | +22% | | Gross profit margin | 62% | 69% | -7 ppts | | Total costs and expenses | $195.3 | $121.5 | +61% | | Net loss | $(65.4) | $(21.2) | -208% | - Average annual revenue per enterprise and mid-market customer increased approximately **32%** to **$645 thousand** for the trailing twelve months ended **March 31, 2022**, compared to **$490 thousand** for the comparable period in **2021**[197](index=197&type=chunk) - Revenue retention rate for enterprise and mid-market customers on the **Conversational Cloud** was within the target range of **105%** to **115%** in **Q1 2022** and exceeded the high end of this range in **Q1 2021**[197](index=197&type=chunk) | Non-GAAP Financial Measures (Three Months Ended March 31) | 2022 (In thousands) | 2021 (In thousands) | | :------------------------------------------------------- | :-------------------- | :-------------------- | | Adjusted EBITDA (loss) | $(17,633) | $13,348 | | Adjusted operating (loss) income | $(24,857) | $6,743 | [Critical Accounting Policies and Estimates](index=46&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies include revenue recognition, stock-based compensation, goodwill valuation, and income taxes; hosted services generated 82% of Q1 2022 revenue - **Critical accounting policies and estimates** include **revenue recognition**, **depreciation**, **stock-based compensation**, **accounts receivable**, **valuation of goodwill and intangible assets**, **income taxes**, and **legal contingencies**[210](index=210&type=chunk) - The majority of **revenue** (**82%** for **Q1 2022**) is from **hosted services**, recognized over time. **Professional services** accounted for **11%**, and **Consumer segment revenue** for **7%**[211](index=211&type=chunk)[216](index=216&type=chunk)[218](index=218&type=chunk)[220](index=220&type=chunk) - **Deferred revenue** increased as of **March 31, 2022**, primarily due to cash payments received in advance of performance obligations. **Contract acquisition costs** (**prepaid sales commissions**) are amortized over **3-5 years**[223](index=223&type=chunk)[213](index=213&type=chunk) - **Stock-based compensation expense** for **Q1 2022** was **$31.9 million**, with significant unrecognized compensation costs for nonvested share-based awards and **RSUs**. The **allowance for doubtful accounts** increased to **$7.2 million** as of **March 31, 2022**[228](index=228&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) Q1 2022 net loss was $65.4 million, compared to $21.2 million in Q1 2021, driven by increased operating expenses despite 21% revenue growth | Revenue by Segment (Three Months Ended March 31) | 2022 (In thousands) | 2021 (In thousands) | % Change | | :----------------------------------------------- | :------------------ | :------------------ | :------- | | Business | $121,075 | $98,880 | 22% | | Consumer | $9,122 | $9,011 | 1% | | **Total** | **$130,197** | **$107,891** | **21%** | | Expense Category (Three Months Ended March 31) | 2022 (In thousands) | 2021 (In thousands) | % Change | | :--------------------------------------------- | :------------------ | :------------------ | :------- | | Cost of revenue - business | $48,221 | $31,610 | 53% | | Cost of revenue - consumer | $1,346 | $1,909 | (29)% | | Sales and marketing - business | $52,283 | $30,203 | 73% | | Sales and marketing - consumer | $5,849 | $6,750 | (13)% | | General and administrative | $29,735 | $14,486 | 105% | | Product development | $56,072 | $33,455 | 68% | | Restructuring costs | $(23) | $2,732 | (101)% | | Amortization of purchased intangibles | $1,841 | $375 | 391% | | Other Expense, net (Three Months Ended March 31) | 2022 (In thousands) | 2021 (In thousands) | % Change | | :----------------------------------------------- | :------------------ | :------------------ | :------- | | Interest expense | $(490) | $(9,129) | (94.6)% | | Other income, net | $60 | $712 | (91.6)% | | **Total Other expense, net** | **$(430)** | **$(8,417)** | **(94.9)%** | - **Net loss** for **Q1 2022** was **$65.4 million**, compared to **$21.2 million** for **Q1 2021**, driven by increased **operating expenses** despite **revenue growth**[270](index=270&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) Cash, cash equivalents, and restricted cash totaled $482.4 million, a $41.2 million decrease, sufficient for 12 months of working capital | Cash Flow Activities (Three Months Ended March 31) | 2022 (In thousands) | 2021 (In thousands) | | :----------------------------------------------- | :------------------ | :------------------ | | Net cash (used in) provided by operating activities | $(22,872) | $25,229 | | Net cash used in investing activities | $(19,899) | $(11,437) | | Net cash provided by financing activities | $1,001 | $3,015 | - As of **March 31, 2022**, **cash, cash equivalents, and restricted cash** totaled **$482.4 million**, a decrease of **$41.2 million** from **December 31, 2021**, primarily due to the **WildHealth acquisition costs**[273](index=273&type=chunk) - The company anticipates current **cash and cash equivalents** will be sufficient to satisfy **working capital** and **capital requirements** for at least the next **12 months**, but may require additional funds for **expansion or acquisitions**[278](index=278&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces foreign currency exchange risks, manages collection risks for accounts receivable, and considers interest rate and inflation risks immaterial - The company faces **foreign currency exchange risk** from operations in Israel, the UK, Netherlands, Germany, France, Italy, Australia, and Japan, with the **U.S. dollar depreciating** approximately **3%** against the **NIS** in **Q1 2022**[282](index=282&type=chunk) - The **allowance for doubtful accounts** increased by **$0.9 million** to approximately **$7.2 million** during the three months ended **March 31, 2022**, reflecting ongoing assessment of **collection risks**[283](index=283&type=chunk) - Changes in market **interest rates** do not materially affect the value of the company's **cash and cash equivalents**, and **inflation** has not had a **material effect** on the business[285](index=285&type=chunk)[286](index=286&type=chunk) [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting - The **Chief Executive Officer** and **Chief Financial Officer** evaluated the **effectiveness** of the company's **disclosure controls and procedures** and concluded they were **effective** as of **March 31, 2022**[289](index=289&type=chunk) - There were **no changes** in the company's **internal control over financial reporting** during the three months ended **March 31, 2022**, that have materially affected, or are reasonably likely to materially affect, **internal control over financial reporting**[290](index=290&type=chunk) [PART II. Other Information](index=53&type=section&id=PART%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) A jury awarded LivePerson $30.3 million in an intellectual property suit, but no amounts are reflected due to anticipated challenges - A jury awarded **LivePerson** approximately **$30.3 million** in an **intellectual property suit** against **[24]7 Customer, Inc.** in **May 2021**, including **$6.7 million** in **compensatory damages** and **$23.6 million** in **punitive damages**[293](index=293&type=chunk) - The company believes the remaining claims filed by **[24]7** are without merit and intends to defend them vigorously. No amounts for the **settlement** have been reflected in the **financial statements** due to anticipated challenges[293](index=293&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors described in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - There have been **no material changes** to the **risk factors** described in the **Annual Report on Form 10-K** for the year ended **December 31, 2021**, filed on **February 28, 2022**[299](index=299&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On February 7, 2022, the company issued 545,629 common shares as partial consideration for the WildHealth acquisition, exempt from registration - On **February 7, 2022**, the company **issued** **545,629 shares** of **common stock** as partial consideration for the **WildHealth acquisition** and an additional **231,194 shares** into escrow accounts, in a transaction **exempted from registration** under **Section 4(a)(2) of the Securities Act of 1933**[301](index=301&type=chunk) [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - There were **no defaults upon senior securities** during the three months ended **March 31, 2022**[304](index=304&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Mine Safety Disclosures** are **not applicable** to the company[305](index=305&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - **No other information** was reported under this item[306](index=306&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO, and Inline XBRL documents - The **exhibits** include **certifications** by the **Chief Executive Officer** and **Chief Financial Officer** (**31.1**, **31.2**, **32.1**, **32.2**) and various **Inline XBRL documents** (**101.INS**, **101.SCH**, **101.CAL**, **101.DEF**, **101.LAB**, **101.PRE**, **104**)[309](index=309&type=chunk) [Signatures](index=60&type=section&id=Signatures) [Signatures](index=60&type=section&id=Signatures_Details) The report was duly signed on May 10, 2022, by Robert P. LoCascio, Chief Executive Officer, and John D. Collins, Chief Financial Officer - The report was **duly signed** on **May 10, 2022**, by **Robert P. LoCascio**, **Chief Executive Officer**, and **John D. Collins**, **Chief Financial Officer**[313](index=313&type=chunk)

| --- | --- | |-----------------------------------------------------------------------------|-------| | | | | | | | | | | First Quarter 2022 | | | Earnings Call Supplemental Slides | | | Rob LoCascio, Chief Executive Officer John Collins, Chief Financial Officer | | | May 9, 2022 | | Disclaimer This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. You c ...

Financial Data and Key Metrics Changes - The company reported revenue of $230.2 million for Q1 2022, representing a 21% year-over-year growth, exceeding the high end of guidance [11][55] - Adjusted EBITDA loss was $17.6 million, which was $4.2 million better than the top end of guidance [11][56] - The company closed the quarter with nearly $1 million in cash and cash equivalents, a decrease of $41 million from the previous quarter [66] Business Line Data and Key Metrics Changes - B2B revenue grew 22% year-over-year, while hosted software revenue increased by 27% [59] - Professional services revenue declined by 3% year-over-year due to timing of projects, but a significant increase is expected in Q2 [59] - Average revenue per customer improved to $645,000, up 32% year-over-year [62] Market Data and Key Metrics Changes - U.S. revenue grew 27% year-over-year, representing 67% of total revenue, while international revenue grew 10% year-over-year, accounting for 33% of total revenue [60] - The consumer segment growth was flat at 1% year-over-year [60] - Total messaging volume on the conversational cloud increased by 27% year-over-year, with AI-powered messaging volume growing by 34% [63] Company Strategy and Development Direction - The company is focused on profitable growth and maintaining its leadership in the AI space, with a profit growth plan initiated at the beginning of the year [12][13] - The strategy includes enhancing the go-to-market approach and leveraging existing relationships for expansion [16][18] - The company aims to integrate voice capabilities into its platform, enhancing the consumer experience across both voice and messaging channels [34][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving free cash flow by Q4 2022 and positive adjusted EBITDA for the full year [14][79] - The company anticipates accelerating growth in the second half of 2022, despite a challenging comparison in Q2 due to record growth in the same period last year [81][115] - Management highlighted the importance of strategic investments in technology and partnerships to drive future growth [100][110] Other Important Information - The company has made significant progress in the healthcare vertical, signing major contracts with leading health insurance providers [46][50] - The acquisition of Wild Health is expected to enhance the company's capabilities in the healthcare sector [48][122] - The company was recognized as the Number One Most Innovative AI Company in the World by Fast Company [52][54] Q&A Session Summary Question: What should we expect in terms of marketing events and pipeline generation? - Management indicated that in-person events have historically driven new logo wins and they plan to continue hosting such events [90][92] Question: Can you elaborate on the healthcare opportunity and the Wild Health acquisition? - The platform from Wild Health will be utilized to provide actionable insights and enhance consumer experiences in healthcare [95][122] Question: Why does the international growth rate lag behind the U.S.? - Management attributed slower international growth to investment focus, emphasizing that North America remains a priority for returns [100][101] Question: How does the company view the competitive environment for live chat? - The company sees itself competing with both call center companies and AI automation firms, focusing on integrating its platform into various systems [108][110] Question: What are the expectations for revenue growth in the second half of the year? - Management expects to see acceleration in growth driven by a ramping salesforce and other favorable market conditions [115][116]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _____ to _____ Commission File Number 000-30141 LIVEPERSON, INC. (Exact name of registrant as specified in its charter) | Delaware | 13-3861628 | | --- | --- | | (State or ot ...

Financial Data and Key Metrics Changes - Q4 2021 revenue was $123.8 million, representing a 21% year-over-year growth, and full-year 2021 revenue reached $469.6 million, a 28% increase, marking a record high for the company [6][28] - Adjusted EBITDA loss for Q4 was $4.4 million, significantly better than the expected loss of $19.5 million, indicating a focus on profitable growth [6][29] - Full-year adjusted EBITDA was $29.1 million, equating to a 6.2% adjusted EBITDA margin [7] Business Line Data and Key Metrics Changes - B2B revenue grew 21% year-over-year in Q4, while hosted software revenue increased by 17% year-over-year [39] - Professional services revenue saw a 42% year-over-year growth, and the consumer segment also grew by 21% [39] - Average revenue per customer (ARPU) increased by 31% year-over-year, reaching $610,000 [22] Market Data and Key Metrics Changes - U.S. revenue grew 27% year-over-year, while international revenue increased by 12% [39] - Conversational Cloud volume for AI-based conversations grew by 44% year-over-year, and total messaging conversations increased by 28% year-over-year [9][41] Company Strategy and Development Direction - The company aims to balance growth with profitability, focusing on leveraging its Conversational Cloud platform for various industries, including healthcare [26][27] - Recent acquisitions of VoiceBase and Tenfold are expected to enhance cross-selling opportunities and integrate voice capabilities into the AI offerings [23][42] - The company is expanding into healthcare, leveraging its experience from COVID-19 testing to build a broader healthcare platform [19][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by changing consumer behavior and government policies affecting COVID-19 testing, which impacted revenue growth expectations for 2022 [34][36] - Despite these challenges, management remains optimistic about the scalability of the healthcare vertical and the potential for profitable growth [52][97] - The company expects to see a significant improvement in EBITDA by the latter half of 2022, with a focus on sustainable revenue growth [88] Other Important Information - The company closed the fourth quarter with $522 million in cash and cash equivalents, a decrease of $111 million from the previous quarter due to M&A activities [43] - Revenue retention remained strong, within the target range of 105% to 115%, marking the 18th consecutive quarter in this range [40] Q&A Session Summary Question: Impact of changing guidance on growth expectations - Management noted that reassessment of hiring plans and changes in consumer behavior led to a reduction in growth expectations for 2022, emphasizing a focus on scalable and profitable growth opportunities [50][52] Question: Hiring environment and demand - Management clarified that the decision to slow down hiring was based on the high costs associated with new quota-carrying reps and the need to focus on existing employees' success [60][56] Question: Go-to-market strategy for healthcare - The company is shifting its go-to-market strategy to leverage partnerships and technology integrations, particularly in the healthcare sector, to drive growth [61][64] Question: Contribution of recent acquisitions - Recent acquisitions contributed low single digits to Q4 revenue, with expectations for mid-to-low single-digit contributions in 2022 as integration efforts continue [69][70] Question: Management changes and sales direction - The return of a key executive is expected to enhance the sales strategy, focusing on leverageable growth rather than traditional staffing models [75][86]

Financial Performance - Fourth quarter revenue reached $123.8 million, representing a year-over-year growth of approximately 21%[6] - Adjusted EBITDA for the fourth quarter was $(4.4) million, exceeding the guidance midpoint by $15.1 million[6] - Full year 2021 revenue grew 28% year-over-year to $469.6 million[6] Conversational Cloud Metrics - Conversational Cloud total volume increased by approximately 13% year-over-year[12] - AI-powered messaging volume on the Conversational Cloud increased by approximately 44% year-over-year[12] Guidance - First quarter 2022 revenue is projected to be between $124.6 million and $126.8 million, representing a year-over-year growth of 15.5% to 17.5%[16] - Full year 2022 revenue is projected to be between $544.8 million and $563.3 million, representing a year-over-year growth of 16.0% to 20.0%[16, 17] - Full year 2022 adjusted EBITDA is targeted in the range of $(20.0) million to $0.0 million[16, 18]

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |----------------------------------------------------------------------------------|-------|-------|-------|-------|-------|-------|-------|-------|-----------------------------------|-------|-------|-------|-------|-------|-------------------|-------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | LIVEPERSON | | | | | | | | | . . . . ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) (Exact name of registrant as specified in its charter) Delaware 13-3861628 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 530 7th Ave, Floor M1 New York, New York 10018 (Address of principal executive offices) (Zip Code) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRA ...

LivePerson, Inc. (NASDAQ:LPSN) Q3 2021 Earnings Conference Call November 2, 2021 5:00 PM ET Company Participants Idalia Rodriguez – Investor Relations Rob LoCascio – Founder and Chief Executive Officer John Collins – Chief Financial Officer Conference Call Participants Sterling Auty – JPMorgan Peter Levine – Evercore Siti Panigrahi – Mizuho Mike Latimore – Northland Capital Markets Jeff Van Rhee – Craig-Hallum Steve Enders – KeyBanc Samad Samana – Jefferies Zach Cummins – B. Riley Operator Good afternoon, l ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission File Number: 000-30141 LIVEPERSON, INC. (Exact name of registrant as specified in its charter) (State o ...