LivePerson : Q1 earnings press release

LivePerson Announces First Quarter 2021 Financial Results

-- Exceeds guidance with a record revenue of $108M and record growth of 38% year-over-year---- Signs 8 seven-figure deals, increases annual contract values more than 120% year-over-year---- Enhances operating leverage, powering Rule of 40 achievement for a third consecutive quarter ---- Expands strategic partnerships with 7-figure deals and extends reach into large target verticals --

-- Raises full year revenue guidance range given continued momentum in Conversational Commerce --

NEW YORK, May 4, 2021 -- LivePerson, Inc. (NASDAQ: LPSN), a global leader in conversational AI, today announced financial results for the first quarter ended March 31, 2021.

First Quarter Highlights

Total revenue was $107.9 million for the first quarter of 2021, an increase of 38% as compared to the same period last year. Within total revenue, business operations revenue for the first quarter of 2021 increased 38% year over year to $98.9 million, and revenue from consumer operations increased 44% year over year to $9.0 million.

LivePerson signed 8 seven-figure deals and 98 deals in total in the first quarter, comprising 29 new and 69 existing customer contracts. Trailing-twelve-months average revenue per enterprise and mid-market customer increased 34% in the first quarter to another record high of $490,000, up from approximately $365,000 in the comparable prior-year period.

"Q1 was the best quarter for growth in the company's history, coming off the back of accelerated demand for our AI and messaging capabilities not only for customer care, but also commerce and new use cases. The team did an incredible job capturing these massive opportunities and executing on our conversational commerce strategy," said CEO and founder Robert LoCascio. "After delivering stellar results in Q1, we entered Q2 laser-focused on retail, e- commerce, and sales and marketing use cases, as well as continued innovation in customer care."

"The depth and breadth of the Conversational Cloud, and the ease with which developers can adapt the platform's products and services to new use cases, have enabled us to rapidly diversify and grow our revenue streams," added CFO John Collins. "Conversational Commerce, AI-assisted telehealth, and customer care innovations like social media management are all growing sources of revenue that reinforce our leadership in the market for Conversational AI."

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Leadership

Renowned executive and digital transformation visionary Ernest L. Cu joined LivePerson's board of directors. Cu is President and CEO of Globe Telecom, Inc., the Philippines' largest mobile operator with over 80 million subscribers and is widely recognized for steering the company's digital transformation, pioneering the creation of the BPO contact center industry in the Philippines, and making mobile experiences central to the country's way of life.

Customer Expansion

During the first quarter, the Company signed contracts with the following new customers:

• A multi-billion dollar, multinational beauty retailer
• A top 3 Global healthcare company
• One of the largest automotive manufacturers in the U.K.
• A top 20 Global bank
• A large mobile operator in Europe

The Company also expanded business with:

• One of the top 10 largest banks in the U.S.
• One of the world 's largest jewelry retailers
• One of the world's largest mobile network providers
• A top 5 cable provider in the U.S
• A leading marketplace and online business directory in the U.K.

Net Loss and Adjusted Operating Income/(Loss)

Net loss for the first quarter of 2021 was $21.2 million or $0.31 per share, as compared to a net loss of $37.0 million or $0.57 per share in the first quarter of 2020. Adjusted operating income, a non-GAAP financial metric, for the first quarter of 2021 was $6.7 million, as compared to an adjusted operating loss of $10.2 million in the first quarter of 2020. Adjusted operating income/(loss) excludes amortization of purchased intangibles, stock-based compensation, other litigation and consulting costs, restructuring costs, acquisition costs, interest income (expense), and other expense (income).

Adjusted EBITDA

Adjusted EBITDA, a non-GAAP financial metric, for the first quarter of 2021 was $13.3 million or $0.18 per share, as compared to a loss of $4.6 million or $0.07 per share in the first quarter of 2020. Adjusted EBITDA excludes amortization of purchased intangibles, stock-based compensation, depreciation, other litigation and consulting costs, restructuring costs, acquisition costs, provision for (benefit from) income taxes, interest income (expense), and other expense (income).

A reconciliation of the non-GAAP financial measures to GAAP measures has been provided in the financial tables included in this press release. An explanation of the non-GAAP financial measures and how they are calculated is included below under the heading "Non-GAAP Financial Measures."

Cash and Cash Equivalents

The Company's cash balance was $668.2 million at March 31, 2021, as compared to $654.2 million at December 31, 2020.

Financial Expectations

With continued strength in the business, the Company is raising revenue guidance for full year 2021 to a range of $460 million to $468 million, up from previous guidance of $458 million to $466 million. The Company is targeting full year revenue growth of 25.5% to 27.5%, up from 25% to 27% previously. Second quarter revenue guidance range is $112.0 million to $114.0 million, or 22% to 24% year-over-year growth.

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With regards to the bottom line, guidance for 2021 adjusted EBITDA of $33.5 million to $41.5 million, or a 7.3% to 8.9% margin remains unchanged. The Company is guiding for second quarter adjusted EBITDA in a range of $5.2 million to $7.2 million or a 4.5% to 6.5% margin.

The Company's detailed financial expectations are as follows:

Second Quarter 2021
	Guidance
Revenue (in millions)	$112.0	- $114.0
GAAP net loss per share	$(0.55)	- $(0.53)
Adjusted operating loss (in millions)	$(4.3)	- $(2.3)
Adjusted EBITDA (in millions)	$5.2	- $7.2

Fully diluted share count (in millions)			76.5
Full Year 2021
	Updated Guidance		Previous Guidance
Revenue (in millions)	$460.0	- $468.0	$458.0	- $466.0
GAAP net loss per share	$(1.90)	- $(1.78)	$(2.03)	- $(1.91)
Adjusted operating (loss)/income (in millions)	$(1.4) - $6.6	$(4.3) - $3.7
Adjusted EBITDA (in millions)	$33.5	- $41.5	$33.5	- $41.5
Fully diluted share count (in millions)	75.9	76.5

Other Full Year 2021 Assumptions

• Estimated IP litigation and consulting expenses of approximately $3.6 million ($0.05 per share) and severance and restructuring of $4.2 million ($0.06 per share)
• Amortization of purchased intangibles and finance leases of approximately $6.2 million
• Non-cashinterest expense of approximately $35.8 million
• Stock-basedcompensation expense of approximately $75.1 million
• Depreciation and amortization of approximately $34.9 million
• Cash taxes paid of $2.0 million to $4.0 million. A GAAP tax liability of approximately $3.0 million
• Capital expenditures of approximately $46.1 million

Furthermore, as a percent of revenue for the year, including amortization of intangibles and stock-based compensation, but excluding non-recurring expenses discussed above, we anticipate gross profit to be in a range of 69.0% to 70.0%, sales and marketing 33.5%, product development 36.7% and general and administrative 14.3%.

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Stock-Based Compensation

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

		Three Months Ended
		March 31,
	2021				2020
Cost of revenue	$	1,895		$	1,249
Sales and marketing		3,782			5,138
General and administrative		2,650			2,727
Product development		6,284			5,581
Total	$	14,611		$	14,695

Amortization of Purchased Intangibles

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

	Three Months Ended
		March 31,
	2021			2020
Cost of revenue	$	1,175	$	284
Amortization of purchased intangibles		375			405
Total	$	1,550	$	689

Supplemental First Quarter 2021 Presentation

LivePerson will post a presentation providing supplemental information for the first quarter 2021 on the investor relations section of the Company's web site at http://www.ir.liveperson.com.

Earnings Teleconference Information

The Company will discuss its first quarter 2021 financial results during a teleconference today, May 4, 2021. To participate via telephone, callers should dial in five to ten minutes prior to the 5:00 p.m. Eastern start time; domestic callers (U.S. and Canada) should dial 1-877-300-8521, while international callers should dial 1-412-317-6026, and both should reference the conference ID "10154654."

The conference call will also be simulcast live on the Internet and can be accessed by logging onto the investor relations section of the Company's web site at http://www.ir.liveperson.com.

If you are unable to participate in the live call, the teleconference will be available for replay approximately two hours after the call. To access the replay, please call 1-844-512-2921 (U.S. and Canada) or 1-412-317-6671 (international). Please reference the conference ID "10154654." A replay will also be available on the investor relations section of the Company's web site at http://www.ir.liveperson.com.

About LivePerson

LivePerson makes life easier for people and brands everywhere through trusted conversational AI. Our 18,000 customers, including leading brands like HSBC, Orange, GM Financial, and The Home Depot, use our conversational solutions to orchestrate humans and AI, at scale, and create a convenient, deeply personal relationship - a conversational relationship - with their millions of consumers. LivePerson was named to Fast Company's World's Most Innovative Companies list in 2020 for its leadership in artificial intelligence. For more information about LivePerson (NASDAQ: LPSN), please visit www.liveperson.com.

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Non-GAAP Financial Measures

Investors are cautioned that the following financial measures used in this press release are "non-GAAP financial measures": (i) adjusted EBITDA, or earnings/(loss) before provision for (benefit from) income taxes, interest income (expense), other expense (income), depreciation and amortization, stock-based compensation, restructuring costs, acquisition costs and other costs; (ii) adjusted operating income (loss), or operating income (loss) excluding amortization, stock-based compensation, restructuring costs, acquisition costs, deferred tax asset valuation allowance, and other costs; and (iii) free cash flow, or net cash provided by operating activities less purchases of property and equipment, including capitalized software.

Non-GAAP financial information 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 non-GAAP financial information because we believe that it is helpful to some investors as one measure of our operations.

Forward-Looking Statements

Statements in this press release and on our earnings call 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, including but not limited to financial guidance, 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 progress, 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. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: major public health issues, and specifically the pandemic caused by the spread of COVID-19, and their effects on the U.S. and global markets; our ability to retain key personnel, attract new personnel and to manage staff attrition; strain on our personnel resources and infrastructure from supporting our existing and growing customer base ; the ability to successfully integrate past or potential future acquisitions; our ability to secure additional financing to execute our business strategy; delays in our implementation cycles; payment-related risks; potential fluctuations in our quarterly revenue and operating results; limitations on the effectiveness of our controls; non-payment or late payment of amounts due to us from a significant number of customers; recent volatility in the capital markets; recognition of revenue from subscriptions; customer retention and engagement; the migration of existing customers to our new platform; our ability to attract new customers and new consumer users of our consumer services; our ability to develop and maintain successful relationships with social media and other third-party consumer messaging platforms and endpoints; the highly competitive markets in which we operate; general economic conditions; privacy concerns relating to the Internet that could result in new legislation or negative public perception; new regulatory or other legal requirements that could materially impact our business; governmental export controls and economic sanctions; industry-specific regulation and unfavorable industry-specific laws, regulations or interpretive positions; future regulation of the Internet or mobile devices; greater than anticipated income, non-income and transactional tax liabilities; failures or security breaches in our services, those of our third party providers, or in the websites of our customers; regulation or possible misappropriation of personal information belonging to our customers' Internet users; technology systems beyond our control and technology-related defects that could disrupt the LivePerson services; our dependence on the continued viability of the Internet; our ability to protect our intellectual property rights or potential infringement of the intellectual property rights of third parties; the use of AI in our product offerings; the presence of, and difficulty in correcting, errors, failures or "bugs" in our products; our ability to license necessary third party software for use in our products and services, and our ability to successfully integrate third party software; potential adverse impact due to foreign currency exchange rate fluctuations; additional regulatory requirements, tax liabilities, currency exchange rate fluctuations and other risks as we expand internationally and/or as we expand into direct-to-consumer services; risks related to our operations in Israel, and the civil and political unrest in that region; potential failure to meeting service level commitments to certain customers; legal liability and/or negative publicity for the services provided to consumers via our technology platforms; technological or other defects that could disrupt or negatively impact our services; our ability to maintain our reputation; our lengthy sales cycles; changes in accounting principles

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