LIVEPERSON INC - Quarter Report: 2006 June (Form 10-Q)

 

 

 

 

 

		PAGE
PART I. FINANCIAL INFORMATION		4
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		4
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2006 (UNAUDITED) AND DECEMBER 31, 2005		4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005		5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 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		16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		24
ITEM 4. CONTROLS AND PROCEDURES		24
PART II. OTHER INFORMATION		25
ITEM 1. LEGAL PROCEEDINGS		25
ITEM 1A. RISK FACTORS		25
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		26
ITEM 6. EXHIBITS		26

 

 

 

 

 

 

		June 30, 2006			December 31, 2005
		(Unaudited)			(Note 1(B))
ASSETS
Current assets:
Cash and cash equivalents		$	19,104		$	17,117
Accounts receivable, net of allowances for doubtful accounts of $67 and $67 as of June 30, 2006 and December 31, 2005, respectively			2,424			1,727
Prepaid expenses and other current assets			939			591
Deferred tax assets			518			—
Total current assets			22,985			19,435
Property and equipment, net			689			575
Intangibles, net			559			790
Security deposits			204			180
Other assets			534			446
Total assets		$	24,971		$	21,426
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	389		$	346
Accrued expenses			2,072			1,803
Deferred revenue			1,831			1,618
Total current liabilities			4,292			3,767
Other liabilities			534			446
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value per share; 5,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2006 and December 31, 2005			—			—
Common stock, $.001 par value per share; 100,000,000 shares authorized, 38,931,768 shares issued and outstanding at June 30, 2006 and 37,979,271 shares issued and outstanding at December 31, 2005			39			38
Additional paid-in capital			120,789			118,556
Accumulated deficit			(100,681	)		(101,381	)
Accumulated other comprehensive loss			(2	)		—
Total stockholders’ equity			20,145			17,213
Total liabilities and stockholders’ equity		$	24,971		$	21,426

 

 

 

 

		Three Months Ended June 30,						Six Months Ended June 30,
		2006			2005			2006			2005
Revenue		$	7,416		$	5,283		$	14,293		$	10,237
Operating expenses:
Cost of revenue			1,642			1,019			3,103			1,882
Product development			1,018			688			1,898			1,363
Sales and marketing			2,856			1,690			5,502			3,175
General and administrative			1,437			1,096			2,939			2,367
Amortization of intangibles			232			232			464			467
Total operating expenses			7,185			4,725			13,906			9,254
Income from operations			231			558			387			983
Other income:
Interest income			170			59			313			102
Total other income			170			59			313			102
Income before provision for income taxes			401			617			700			1,085
Provision for income taxes			—			216			—			380
Net income		$	401		$	401		$	700		$	705
Basic net income per common share		$	0.01		$	0.01		$	0.02		$	0.02
Diluted net income per common share		$	0.01		$	0.01		$	0.02		$	0.02
Weighted average shares outstanding used in basic net income per common share calculation			38,900,328			37,487,015			38,578,791			37,460,574
Weighted average shares outstanding used in diluted net income per common share calculation			42,818,687			39,400,983			42,471,432			39,408,879

 

 

 

 

		Six Months Ended June 30,
		2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	700		$	705
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense			1,022			—
Depreciation			140			92
Loss on disposal of leasehold improvements			51			—
Amortization of intangibles			464			467
Tax benefit from employee stock option exercises			—			353
Provision for doubtful accounts, net			—			30
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable			(697	)		(426	)
Prepaid expenses and other current assets			(363	)		(281	)
Security deposits			(24	)		—
Accounts payable			43			(78	)
Accrued expenses			269			(293	)
Deferred revenue			213			350
Net cash provided by operating activities			1,818			919
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, including capitalized software			(305	)		(225	)
Acquisition of intangible asset			(233	)		—
Net cash used in investing activities			(538	)		(225	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock in connection with the exercise of options			709			66
Net cash provided by financing activities			709			66
Effect of foreign exchange rate changes on cash and cash equivalents			(2	)		—
Net increase in cash and cash equivalents			1,987			760
Cash and cash equivalents at the beginning of the period			17,117			12,425
Cash and cash equivalents at the end of the period		$	19,104		$	13,185
Supplemental Disclosures:
Cash paid during the period for:
Income taxes		$	—		$	30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(D)	STOCK-BASED COMPENSATION

 

 

 

 

 

 

 

 

		Three Months Ended June 30, 2006			Six Months Ended June 30, 2006
Cost of revenue		$	40		$	83
Product development expense			102			229
Sales and marketing expense			112			296
General and administrative expense			185			414
Total stock based compensation included in operating expenses		$	439		$	1,022

 

		Three Months Ended June 30, 2006
Dividend yield			0.0	%
Risk-free interest rate			4.8	%
Expected life (in years)			4
Historical volatility			79.0	%

 

 

		Three Months Ended June 30, 2005			Six Months Ended June 30, 2005
Net income as reported		$	401		$	705
Deduct: Pro forma stock-based compensation cost		$	(514	)	$	(1,008	)
Pro forma net (loss)		$	(113	)	$	(303	)
Basic net income (loss) per common share:
As reported		$	0.01		$	0.02
Pro forma		$	(0.00	)	$	(0.01	)
Diluted net income (loss) per common share:
As reported		$	0.01		$	0.02
Pro forma		$	(0.00	)	$	(0.01	)

 

 

 

 

 

		Options			Weighted Average Exercise Price
Options outstanding at December 31, 2005			8,300,053		$	2.16
Options granted			569,000		$	6.05
Options exercised			(952,497	)	$	0.76
Options cancelled			(259,125	)	$	2.15
Options outstanding at June 30, 2006			7,657,431		$	2.60
Options exercisable at June 30, 2006			3,935,806		$	2.06

 

 

 

 

 

 

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			2,237,732			5.58		$	0.58			1,754,107		$	0.54
	$1.01-$2.00			1,104,449			6.10		$	1.93			704,449		$	1.92
	$2.01-$5.00			3,430,625			8.04		$	3.15			1,130,625		$	3.04
	$5.01-$11.00			884,625			7.41		$	6.45			346,625		$	6.83
				7,657,431									3,935,806

 

 

		Shares			Weighted Average Grant-Date Fair Value
Nonvested Shares at January 1, 2006			3,827,250		$	1.65
Granted			569,000		$	3.73
Vested			(529,250	)	$	2.25
Cancelled			(145,375	)	$	2.15
Nonvested Shares at June 30, 2006			3,721,625		$	3.18

 

 

 

 

 

 

 

 

·	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		$	4,158		$	512		$	2,751		$	895		$	—
Total		$	4,158		$	512		$	2,751		$	895		$	—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Director Nominee or Proposal		For			Against/Withheld			Abstentions			Broker Non- Votes
Kevin C. Lavan			30,679,034			150,470			—			—
Robert P. LoCascio			29,019,875			1,809,629			—			—
Ratification of BDO Seidman, LLP			30,696,141			42,520			90,841			—

 

 

 

2.1	Agreement and Plan of Merger, dated as of June 22, 2006, among LivePerson, Inc., Soho Acquisition Corp., Proficient Systems, Inc. and Gregg Freishtat as Shareholders’ Representative (incorporated by reference to the identically numbered exhibit in the Registrant’s Current Report on Form 8-K filed on June 22, 2006)
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: August 9, 2006	By:	/s/ ROBERT P. LOCASCIO
		Name: Robert P. LoCascio
		Title: Chief Executive Officer (duly authorized officer)
Date: August 9, 2006	By:	/s/ TIMOTHY E. BIXBY
		Name: Timothy E. Bixby
		Title: President, Chief Financial Officer and Secretary (principal financial and accounting officer)

 

 

 

 

2.1	Agreement and Plan of Merger, dated as of June 22, 2006, among LivePerson, Inc., Soho Acquisition Corp., Proficient Systems, Inc. and Gregg Freishtat as Shareholders’ Representative (incorporated by reference to the identically numbered exhibit in the Registrant’s Current Report on Form 8-K filed on June 22, 2006)
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