LivePerson (LPSN) Q4 2007 earnings summary

Executive summary

• FY07 revenue rose 56% to $52.2M; net income reached $5.8M, up from $2.2M in FY06.

• Hosted more than 50M chat interactions; more than 6,000 businesses used the platform, and Kasamba facilitated over 600,000 paid expert-advice transactions after its October acquisition.

• Growth came from both existing and new clients, with expansion across enterprise, SMB, professional services and direct-to-consumer offerings.

Financial highlights

• Revenue was $52.228M vs. $33.521M in FY06; excluding $2.8M of Kasamba revenue, revenue was $49.4M, up 47% as reported.

• Operating income increased to $3.214M from $1.049M; net income was $5.821M vs. $2.202M.

• Gross margin was 74%, down from 77% YoY, reflecting higher infrastructure and service costs and a larger enterprise client mix.

• Operating cash flow was $8.993M; investing cash use was $10.140M, primarily for Kasamba and fixed assets; ending cash was $26.222M.

• Revenue grew across existing accounts and new clients; existing-client growth contributed ~$7.8M and new-client revenue, including Proficient, ~$7.0M.

Outlook and guidance

• Cash and operating cash generation were expected to cover working capital and capital needs for at least 12 months.

• 2008 capital expenditures were expected not to exceed $4.0M; the eastern U.S. collocation facility build had used ~$2.0M through year-end 2007.

• 2008 amortization expense was expected to be ~$2.6M; continued UK and Western Europe expansion and product development were strategic priorities.