10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

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 Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)
475 Tenth Avenue, 5th Floor New York, New York	10018
(Address of Principal Executive Offices)	(Zip Code)

(212) 609-4200

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one).

Large accelerated filer ¨	Accelerated filer ý
Non-accelerated filer ¨	Smaller reporting company ¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

On May 5, 2015, 57,051,150 shares of the registrant’s common stock were outstanding.

1

LIVEPERSON, INC. March 31, 2015 FORM 10-Q INDEX
		PAGE
Part I.	Financial Information	4
Item 1.	Financial Statements	4
	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014	4
	Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2015 and 2014	5
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2015 and 2014	6
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32
Part II.	Other Information	33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		37

2

FORWARD-LOOKING STATEMENTS

STATEMENTS IN THIS REPORT ABOUT LIVEPERSON, INC. THAT ARE NOT HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS BASED ON OUR CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT LIVEPERSON AND OUR INDUSTRY. THESE FORWARD-LOOKING STATEMENTS 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 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 YEAR OR EACH QUARTER IN THE YEAR PROGRESSES, AND THEREFORE IT SHOULD BE CLEARLY UNDERSTOOD THAT THE INTERNAL PROJECTIONS AND BELIEFS UPON WHICH WE BASE OUR EXPECTATIONS MAY CHANGE PRIOR TO THE END OF EACH QUARTER OR THE YEAR. ALTHOUGH THESE EXPECTATIONS MAY CHANGE, WE ARE UNDER NO OBLIGATION TO INFORM YOU IF THEY DO. OUR COMPANY POLICY IS GENERALLY TO PROVIDE OUR EXPECTATIONS ONLY ONCE PER QUARTER, AND NOT TO UPDATE THAT INFORMATION UNTIL THE NEXT QUARTER. ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN THE PROJECTIONS OR FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED IN PART II, ITEM 1A, “RISK FACTORS.”

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Part I. Financial Information

Item 1. Financial Statements

LIVEPERSON, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
	March 31, 2015			December 31, 2014
				(Note 1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	40,836		$	49,372
Accounts receivable, net of allowance for doubtful accounts of $1,360 and $1,275 as of March 31, 2015 and December 31, 2014, respectively	35,588			31,382
Prepaid expenses and other current assets	12,919			10,374
Deferred tax assets, net	1,236			2,575
Total current assets	90,579			93,703
Property and equipment, net	20,973			19,583
Intangibles, net	30,629			32,620
Goodwill	80,310			80,848
Deferred tax assets, net	11,281			10,762
Other assets	2,316			2,301
Total assets	$	236,088		$	239,817
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	12,568		$	8,985
Accrued expenses and other current liabilities	31,531			37,772
Deferred revenue	10,216			11,992
Total current liabilities	54,315			58,749
Other liabilities	724			731
Total liabilities	55,039			59,480
Commitments and contingencies (See Note 10)
STOCKHOLDERS’ EQUITY (See Note 11):
Common stock	58			57
Additional paid-in capital	277,801			274,046
Treasury stock	(1		)	(1		)
Accumulated deficit	(94,682		)	(92,627		)
Accumulated other comprehensive loss	(2,127		)	(1,138		)
Total stockholders’ equity	181,049			180,337
Total liabilities and stockholders’ equity	$	236,088		$	239,817

See Notes to Condensed Consolidated Financial Statements (unaudited).

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LIVEPERSON, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)
	Three Months Ended
	March 31,
	2015			2014
Revenue	$	59,770		$	47,828
Costs and expenses (1) (2)
Cost of revenue (3)	16,254			11,735
Sales and marketing	24,294			18,395
General and administrative	10,164			9,499
Product development	9,800			8,951
Amortization of purchased intangibles	1,313			190
Total costs and expenses	61,825			48,770
Loss from operations	(2,055		)	(942		)
Other expense	(231		)	(83		)
Loss before benefit from income taxes	(2,286		)	(1,025		)
Benefit from income taxes	(228		)	(231		)
Net loss	$	(2,058	)	$	(794	)
Net loss per share of common stock:
Basic	$	(0.04	)	$	(0.01	)
Diluted	$	(0.04	)	$	(0.01	)
Weighted-average shares used to compute net loss per share:
Basic	56,291,383			54,666,535
Diluted	56,291,383			54,666,535
(1) Amounts include stock compensation expense, as follows:
Cost of revenue	$	328		$	360
Sales and marketing	595			814
General and administrative	932			843
Product development	939			680
(2) Amounts include depreciation expense, as follows:
Cost of revenue	$	1,903		$	1,397
Sales and marketing	250			207
General and administrative	237			200
Product development	188			177
(3) Amounts include amortization of purchased intangibles, as follows:
Cost of revenue	$	839		$	868

See Notes to Condensed Consolidated Financial Statements (unaudited).

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LIVEPERSON, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (IN THOUSANDS) (UNAUDITED)
	Three Months Ended
	March 31,
	2015			2014
Net loss	$	(2,058	)	$	(794	)
Foreign currency translation adjustment	(989		)	140
Comprehensive loss	$	(3,047	)	$	(654	)

See Notes to Condensed Consolidated Financial Statements (unaudited).

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LIVEPERSON, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
	Three Months Ended
	March 31,
	2015			2014
OPERATING ACTIVITIES:
Net loss	$	(2,058	)	$	(794	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	2,794			2,697
Depreciation	2,578			1,981
Amortization of purchased intangibles	2,152			1,058
Deferred income taxes and other non-cash tax items	820			(76		)
Provision for doubtful accounts, net	403			271
Changes in operating assets and liabilities:
Accounts receivable	(4,609		)	48
Prepaid expenses and other current assets	(2,544		)	(3,930		)
Other assets	(15		)	460
Accounts payable	1,359			1,114
Accrued expenses and other current liabilities	(7,045		)	(3,828		)
Deferred revenue	(1,776		)	(1,586		)
Other liabilities	361			(414		)
Net cash used in operating activities	(7,580		)	(2,999		)
INVESTING ACTIVITIES:
Purchases of property and equipment, including capitalized software	(1,783		)	(1,456		)
Investment in technology licenses	—			(3,174		)
Payments for acquisitions and intangible assets, net of cash acquired	—			(125		)
Net cash used in investing activities	(1,783		)	(4,755		)
FINANCING ACTIVITIES:
Excess tax benefit from the exercise of employee stock options	751			—
Proceeds from issuance of common stock in connection with the exercise of options	2,284			2,978
Repurchase of common stock	(2,058		)	(7,841		)
Net cash provided by (used in) financing activities	977			(4,863		)
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(150		)	84
CHANGE IN CASH AND CASH EQUIVALENTS	(8,536		)	(12,533		)
CASH AND CASH EQUIVALENTS - Beginning of the period	49,372			91,906
CASH AND CASH EQUIVALENTS - End of the period	$	40,836		$	79,373
SUPPLEMENTAL DISCLOSURE OF OTHER CASH FLOW INFORMATION:
Cash paid for income taxes	$	583		$	1,037
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Purchase of property and equipment recorded in accounts payable	$	2,224		$	1,174
Acquisition costs in connection with NexGraph recorded in accrued expenses	$	—		$	375

See Notes to Condensed Consolidated Financial Statements (unaudited).

7

LIVEPERSON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Description of Business and Basis of Presentation

LivePerson, Inc. (the “Company” or “LivePerson”) was incorporated in the State of Delaware in November 1995 and the LivePerson service was introduced in November 1998. In April 2000, the Company completed an initial public offering and is currently traded on the Nasdaq Global Select Market and the Tel Aviv Stock Exchange. LivePerson is headquartered in New York City with offices in Amsterdam, Atlanta, Berlin, London, Mannheim, Melbourne, Milan, Ra'anana, Reading (UK), San Francisco and Tokyo.

LivePerson provides online engagement solutions offering a cloud-based platform which enables businesses to proactively connect with consumers through chat, voice and content delivery, across multiple channels and screens, including websites, social media, tablets and mobile devices. The Company’s engagements are driven by insights derived from a broad set of consumer and business data, including historical, behavioral, operational, and third party data. Each engagement is based on proprietary analytics and a real-time understanding of consumer needs and business objectives. The Company’s products, coupled with its domain knowledge and industry expertise, have been proven to maximize the effectiveness of the online channel — by increasing sales, as well as consumer satisfaction and loyalty ratings for its customers, while also enabling its customers to reduce consumer service costs.

LivePerson monitors and analyzes valuable online consumer behavioral data on behalf of its customers. Spanning the breadth of an online visitor session, starting from an initial keyword search through actions on their customer’s website, and even into a shopping cart and an executed sale, this data enables the Company to develop unique insights into consumer behavior during specific transactions within a customer’s user base.

The Company’s primary revenue source is from the sale of LivePerson services to businesses of all sizes. The Company also offers an online marketplace that connects independent service providers (“Experts”) who provide information and knowledge for a fee via real-time chat with individual consumers (“Users”).

Basis of Presentation

The accompanying condensed consolidated financial statements as of March 31, 2015 and for the three months ended March 31, 2015 and 2014 are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the consolidated financial position of LivePerson as of March 31, 2015, and the consolidated results of operations, comprehensive loss and cash flows for the interim periods ended March 31, 2015 and 2014. The financial data and other information disclosed in these notes to the condensed consolidated financial statements related to these periods are unaudited. The results of operations for any interim period are not necessarily indicative of the results of operations for any other future interim period or for a full fiscal year. The condensed consolidated balance sheet at December 31, 2014 has been derived from audited consolidated financial statements at that date.

Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2014, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2015.

Principles of Consolidation

The condensed consolidated financial statements include the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the condensed consolidated financial statements; therefore, actual results could differ from management’s estimates.

Recently Issued Accounting Standards

On February 18, 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”), which affects reporting entities

8

that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The standard amends the consolidation requirements in ASC 810. ASU 2015-02 is effective for fiscal periods beginning after December 15, 2015 for public companies, and early adoption is permitted. The Company does not expect to early adopt ASU 2015-02, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes most existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures).  The Company will adopt this guidance at the beginning of its first quarter of fiscal year 2017. Adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements or disclosures.

2. Revenue Recognition 

The majority of the Company’s revenue is generated from monthly service revenues and related professional services from the sale of the LivePerson services. Because the Company provides its application as a service, the Company follows the provisions of FASB Accounting Standards Codification (“ASC”) 605-10-S99, “Revenue Recognition” and ASC 605-25, “Revenue Recognition with Multiple-Element Arrangements.” The Company charges a monthly fee, which varies by type of service, the level of customer usage and website traffic, and in some cases, the number of orders placed via the Company’s online engagement solutions.

For certain of the Company’s larger customers, the Company may provide call center labor through an arrangement with one or more of several qualified vendors. For most of these customers, the Company passes the fee it incurs with the labor provider and its fee for the hosted services through to its customers in the form of a fixed fee for each order placed via the Company’s online engagement solutions. For these Pay for Performance (“PFP”) arrangements, in accordance with ASC 605-45, “Principal Agent Considerations,” the Company records revenue for transactions in which it acts as an agent on a net basis, and revenue for transactions in which it acts as a principal on a gross basis.

The Company also sells certain of the LivePerson services directly via Internet download.  These services are marketed as LiveEngage for small to medium-sized businesses, and are paid for almost exclusively by credit card.  Credit card payments accelerate cash flow and reduce the Company’s collection risk, subject to the merchant bank's right to hold back cash pending settlement of the transactions.  Sales of LiveEngage may occur with or without the assistance of an online sales representative, rather than through face-to-face or telephone contact that is typically required for traditional direct sales.

The Company recognizes monthly service revenue based upon the fee charged for the LivePerson services, provided that there is persuasive evidence of an arrangement, no significant Company obligations remain, collection of the resulting receivable is probable and the amount of fees to be paid is fixed or determinable. The Company’s service agreements typically have twelve month terms and, in some cases, are terminable or may terminate upon 30 to 90 days’ notice without penalty. When professional service fees add value to the customer on a standalone basis, the Company recognizes professional service fees upon completion and customer acceptance. ASU 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) best estimated selling price. If a professional services arrangement does not qualify for separate accounting, the Company recognizes the fees, and the related labor costs, ratably over the contracted period.

For revenue from the Company's Consumer segment generated from online transactions between Experts and Users, the Company recognizes revenue net of the Expert fees in accordance with ASC 605-45, “Principal Agent Considerations,” due primarily to the fact that the Expert is the primary obligor. Additionally, the Company performs as an agent without any risk of loss for collection, and is not involved in selecting the Expert or establishing the Expert’s fee. The Company collects a fee from the User and retains a portion of the fee, and then remits the balance to the Expert. Revenue from these transactions is recognized when there is persuasive evidence of an arrangement, no significant Company obligations remain, collection of the resulting receivable is probable and the amount of fees to be paid is fixed and determinable.

9

3. Net Loss Per Share

The Company calculates earnings per share (“EPS”) in accordance with the provisions of ASC 260-10 and the guidance of SEC Staff Accounting Bulletin (“SAB”) No. 98. Under ASC 260-10, basic EPS excludes dilution for common stock equivalents and is computed by dividing net income or loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. All options, warrants or other potentially dilutive instruments issued for nominal consideration are required to be included in the calculation of basic and diluted net income attributable to common stockholders. Diluted EPS is calculated using the treasury stock method and reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and resulted in the issuance of common stock.

Diluted net loss per common share for the three months ended March 31, 2015 and 2014 does not include the effect of options to purchase 10,152,741 and 9,678,582 shares of common stock, respectively, as the effect of their inclusion is anti-dilutive.

A reconciliation of shares used in calculating basic and diluted earnings per share follows:

	Three Months Ended
	March 31,
	2015	2014
Basic	56,291,383	54,666,535
Effect of assumed exercised options	—	—
Diluted	56,291,383	54,666,535

4. Segment Information

The Company accounts for its segment information in accordance with the provisions of ASC 280-10, “Segment Reporting.” ASC 280-10 establishes annual and interim reporting standards for operating segments of a company. ASC 280-10 requires disclosures of selected segment-related financial information about products, major customers, and geographic areas based on the Company’s internal accounting methods. The Company is organized into two operating segments for purposes of making operating decisions and assessing performance. The Business segment facilitates real-time online interactions – chat, voice and content delivery across multiple channels and screens for global corporations of all sizes. The Consumer segment facilitates online transactions between Experts and Users and sells its services to consumers. Both segments currently generate their revenue primarily in the United States. The chief operating decision maker, who is the chief executive officer, evaluates performance, makes operating decisions, and allocates resources based on the operating income of each segment. The reporting segments follow the same accounting polices used in the preparation of the Company’s condensed consolidated financial statements which are described in the summary of significant accounting policies. The Company allocates cost of revenue, sales and marketing and amortization of purchased intangibles to the segments, but it does not allocate product development expenses, general and administrative expenses and income tax expense because management does not use this information to measure performance of the operating segments. There are currently no inter-segment sales.

Summarized financial information by segment for the three months ended March 31, 2015, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision maker, follows (amounts in thousands):

	Business		Consumer		Corporate			Consolidated
Revenue:
Hosted services – Business	$	50,613	$	—	$	—		$	50,613
Hosted services – Consumer	—		3,696		—			3,696
Professional services	5,461		—		—			5,461
Total revenue	56,074		3,696		—			59,770
Cost of revenue	15,617		637		—			16,254
Sales and marketing	22,852		1,442		—			24,294
Amortization of purchased intangibles	1,313		—		—			1,313
Unallocated corporate expenses	—		—		19,964			19,964
Operating income (loss)	$	16,292	$	1,617	$	(19,964	)	$	(2,055	)

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Summarized financial information by segment for the three months ended March 31, 2014, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision maker, follows (amounts in thousands):

	Business		Consumer		Corporate			Consolidated
Revenue:
Hosted services – Business	$	39,680	$	—	$	—		$	39,680
Hosted services – Consumer	—		3,910		—			3,910
Professional services	4,238		—		—			4,238
Total revenue	43,918		3,910		—			47,828
Cost of revenue	11,220		515		—			11,735
Sales and marketing	16,918		1,477		—			18,395
Amortization of purchased intangibles	190		—		—			190
Unallocated corporate expenses	—		—		18,450			18,450
Operating income (loss)	$	15,590	$	1,918	$	(18,450	)	$	(942	)

Geographic Information

The Company is domiciled in the United States and has international operations in the United Kingdom, Asia-Pacific, Latin America and Western Europe, particularly France and Germany. The following table presents the Company’s revenues attributable to domestic and foreign operations for the periods presented (amounts in thousands):

	Three Months Ended
	March 31,
	2015		2014
United States	$	41,442	$	31,098
Other Americas (1)	2,703		2,150
Total Americas	44,145		33,248
EMEA (2)	11,784		10,515
APAC (3)	3,841		4,065
Total revenue	$	59,770	$	47,828

⁽¹⁾ Canada, Latin America and South America

⁽²⁾ Europe, the Middle East and Africa (“EMEA”)

⁽³⁾ Asia-Pacific (“APAC”)

The following table presents the Company's long-lived assets by geographic region for the periods presented (amounts in thousands):

	March 31,		December 31,
	2015		2014
United States	$	109,517	$	109,006
Israel	18,173		18,982
Australia	8,132		8,500
Netherlands	7,709		7,686
Other (1)	1,978		1,940
Total long-lived assets	$	145,509	$	146,114

⁽¹⁾ United Kingdom, Germany, Japan and Italy

No individual customer accounted for 10% or more of consolidated revenue for any of the periods presented. One customer accounted for approximately 16% and 22% of accounts receivable as of March 31, 2015 and December 31, 2014, respectively.

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5. Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the three months endedMarch 31, 2015 are as follows (amounts in thousands):

	Business			Consumer		Total
Balance as of December 31, 2014	$	72,824		$	8,024	$	80,848
Adjustments to goodwill:
Foreign exchange adjustment	(538		)	—		(538		)
Balance as of March 31, 2015	$	72,286		$	8,024	$	80,310

The changes in the carrying amount of goodwill for the year ended December 31, 2014 are as follows (amounts in thousands):

	Business		Consumer		Total
Balance as of December 31, 2013	$	24,700	$	8,024	$	32,724
Adjustments to goodwill:
Acquisitions	48,124		—		48,124
Balance as of December 31, 2014	$	72,824	$	8,024	$	80,848

Intangible Assets

Intangible assets are summarized as follows (see Note 8) (amounts in thousands):

	As of March 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Amortization Period
Amortizing intangible assets:
Technology	$	28,005	$	(12,379	)	$	15,626	5.3 years
Customer relationships	16,008		(4,818		)	11,190		7.9 years
Trade names	1,287		(946		)	341		2.8 years
Non-compete agreements	1,446		(721		)	725		2.3 years
Patents	3,290		(584		)	2,706		9.9 years
Other	312		(271		)	41		3.0 years
Total	$	50,348	$	(19,719	)	$	30,629

	As of December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Amortization Period
Amortizing intangible assets:
Technology	$	27,844	$	(11,303	)	$	16,541	5.3 years
Customer relationships	16,008		(4,055		)	11,953		7.9 years
Trade names	1,287		(817		)	470		2.8 years
Non-compete agreements	1,446		(625		)	821		2.3 years
Patents	3,290		(500		)	2,790		9.9 years
Other	312		(267		)	45		3.0 years
Total	$	50,187	$	(17,567	)	$	32,620

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Amortization expense is calculated over the estimated useful life of the asset. Aggregate amortization expense for intangible assets was $2.2 million and $1.1 million for the three months ended March 31, 2015 and 2014, respectively. For the three months ended March 31, 2015 and 2014, respectively, a portion of this amortization is included in cost of revenue. Estimated amortization expense for the next five years is as follows (amounts in thousands):  

	Estimated Amortization Expense
2015	$	5,828
2016	6,755
2017	4,934
2018	2,815
2019	2,809
Thereafter	7,488
Total	$	30,629

6. Property and Equipment

The following table presents the detail of property and equipment for the periods presented (amounts in thousands):

	March 31, 2015			December 31, 2014
Computer equipment and software	$	59,122		$	55,293
Furniture, equipment and building improvements	9,578			9,439
	68,700			64,732
Less: accumulated depreciation	(47,727		)	(45,149		)
Total	$	20,973		$	19,583

7. Accrued and Other Current Liabilities

The following table presents the detail of accrued and other current liabilities for the periods presented (amounts in thousands):

	March 31, 2015		December 31, 2014
Payroll and other employee related costs	$	10,893	$	15,373
Professional services and consulting and other vendor fees	9,730		9,258
Sales commissions	1,448		3,268
Contingent earnout (see Notes 8 and 9)	6,591		6,940
Other	2,869		2,933
Total	$	31,531	$	37,772

8. Acquisitions

Engage Pty Ltd.

On November 9, 2012, the Company acquired all of the outstanding shares of Engage Pty Ltd. (“Engage”), an Australian provider of cloud-based customer contact solutions. The transaction was accounted for under the purchase method of accounting and, accordingly, the operating results of Engage were included in the Company’s consolidated results of operations from the date of acquisition.

The purchase price was approximately $10.6 million. The total acquisition costs incurred in the year ended December 31, 2012 were approximately $0.5 million and are included in general and administrative expenses in the Company’s condensed consolidated statements of operations for the same period. The acquisition enhances the Company’s ability to offer intelligent engagement solutions to businesses in the Asia Pacific region. Of the total purchase price, $0.8 million was allocated to the net book values of the acquired assets and assumed liabilities. The historical carrying amounts of such assets and liabilities approximated

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their fair values. All receivables acquired are expected to be collectible. The purchase price in excess of the fair value of the net book values of the assets acquired and liabilities assumed was allocated to intangible assets based on management’s best estimate of fair values, taking into account all relevant information available at the time of acquisition, and the excess was allocated to goodwill. The goodwill is not deductible for tax purposes. The intangible assets are being amortized over their expected period of benefit. The purchase price includes approximately $1.7 million of potential earn-out consideration for the shareholders if certain revenue targets are achieved. The earn-out is payable in shares of LivePerson common stock and cash. The Company recorded the contingent earn-out as part of the purchase price. In accordance with ASC 480, the Company has classified this amount as a liability and the amount is included in accrued expenses in the March 31, 2015 condensed consolidated balance sheets, due to the variable number of shares that will be issued if and when the targets are achieved. The Company assessed this earn-out at March 31, 2015 with no change from the original estimate. There was a decrease in the liability during the quarter ended March 31, 2015 as a result of a payment made of $0.3 million. The Company will assess the earn-out calculation in future periods and any future adjustments will affect operating income.

NexGraph, LLC

On March 11, 2014, the Company acquired all the outstanding shares of NexGraph, LLC (“NexGraph”), a company focused on analytic solutions, in exchange for aggregate cash consideration of $0.5 million. Of the purchase price, $0.1 million was allocated to Intangibles, net, of which was fully amortized as of March 31, 2015; and $0.4 million of the purchase price was allocated to Goodwill.

Synchronite, LLC

On June 2, 2014, the Company acquired Synchronite, LLC (“Synchronite”), a German-based start-up that provides co-browsing technology. The transaction was accounted for under the purchase method of accounting and, accordingly, the operating results of Synchronite were included in the Company’s consolidated results of operations from the date of acquisition.

The allocation of the total purchase price of approximately $4.1 million was based upon the estimated fair value of Synchronite's net tangible and identifiable intangible assets as of the date of acquisition. The total acquisition costs incurred were approximately $0.4 million and are included in general and administrative expenses in the Company’s condensed consolidated statements of operations. Of the total purchase price, $45,000 was allocated to the net book values of the acquired assets and assumed liabilities. The historical carrying amounts of such assets and liabilities approximated their fair values. All receivables acquired are expected to be collectible. The purchase price includes approximately $2.7 million of goodwill and approximately $1.5 million of intangible assets. The goodwill will be deductible for tax purposes. The intangible assets are being amortized over their expected period of benefit. The purchase price includes $1.8 million of potential earn-out consideration for the shareholders if complete product integration is achieved. The earn-out is payable in shares of LivePerson common stock and cash. The Company recorded the contingent earn-out as part of the purchase price. In accordance with ASC 480, the Company has classified this amount as a liability and the amount is included in accrued expenses in the March 31, 2015 condensed consolidated balance sheet, due to the variable number of shares that will be issued if and when the targets are achieved. The Company has assessed the earn-out calculation at March 31, 2015, with no change from the original estimate, and will assess the earn-out calculation in future periods and any future adjustments will affect operating income.

The components of the intangible assets are as follows (amounts in thousands): 

	Weighted Average Useful Life (Months)	Amount
Technology	120	$	1,082
Trade-name	48	62
Customer relationships	84	247
Non-compete agreements	36	60
		$	1,451

Contact At Once!, LLC

On November 7, 2014, the Company acquired Contact At Once!, LLC (“CAO!”), a software company with a cloud-based platform that instantly connects consumers with businesses through instant messaging, text messaging, chat, social media and video over the internet for consumer-to-business sales conversions. The transaction was accounted for under the purchase method of accounting and, accordingly, the operating results of CAO! were included in the Company’s consolidated results of operations from the date of acquisition. The Company is in the process of finalizing all fair value and purchase accounting adjustments.

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The allocation of the total purchase price of approximately $67.0 million, which includes approximately $42.8 million in cash, approximately $20.0 million in shares of common stock and approximately $4.2 million of potential earn-out consideration in cash, was based upon the estimated fair value of CAO!'s net tangible and identifiable intangible assets as of the date of acquisition. The historical carrying amounts of such assets and liabilities approximated their fair values. All receivables acquired are expected to be collectible. The purchase price includes approximately $45.1 million of goodwill and approximately $20.4 million of intangible assets. The goodwill will be deductible for tax purposes. The intangible assets are being amortized over their expected period of benefit. The purchase price includes $4.2 million of potential earn-out consideration for the shareholders if certain targeted financial, strategic and integration objectives is achieved. The earn-out is payable in cash. The Company recorded the contingent earn-out as part of the purchase price. In accordance with ASC 480, the Company has classified this amount as a liability and is included in accrued expenses in the December 31, 2014 consolidated balance sheet. The Company has assessed this earn-out at March 31, 2015, with no change from the original estimate, and will assess the earn-out calculation in future periods and any future adjustments will affect operating income.

Management’s preliminary allocation of the purchase price in connection with the CAO! acquisition is as follows (amounts in thousands):

Cash	$	480
Accounts receivable	2,694
Other currents assets	289
Property and equipment	231
Other assets	43
Intangible assets	20,400
Goodwill	45,064
	69,201
Liabilities assumed	(2,203		)
Total purchase price consideration	$	66,998

The components of the intangible assets are as follows (amounts in thousands):

	Weighted Average Useful Life (Months)	Amount
Technology	96	$	8,400
Trade-name	12	500
Customer relationships	120	10,700
Non-compete agreements	36	800
		$	20,400

9. Fair Value Measurements

The Company measures its cash equivalents at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value:

• Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2: Inputs reflect: quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

• Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

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Financial Assets and Liabilities

The Company's assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy as of March 31, 2015 and December 31, 2014, are summarized as follows (amounts in thousands):

	March 31, 2015								December 31, 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	3,088	$	—	$	—	$	3,088	$	3,987	$	—	$	—	$	3,987
Total assets	$	3,088	$	—	$	—	$	3,088	$	3,987	$	—	$	—	$	3,987
Liabilities:
Contingent earn-out	$	—	$	—	$	6,590	$	6,590	$	—	$	—	$	6,940	$	6,940
Foreign currency derivative contracts	—		423		—		423		—		—		—		—
Total liabilities	$	—	$	423	$	6,590	$	7,013	$	—	$	—	$	6,940	$	6,940

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's assumptions based on the best information available.

The Company's only asset that is measured at fair value on a recurring basis is money market funds, based on quoted market prices in active markets and therefore classified as level 1 within the fair value hierarchy. The Company's contingent earn-out liability and foreign currency derivative contract liability are measured at fair value on a recurring basis and are classified as level 3 and level 2, respectively, within the fair value hierarchy. On a nonrecurring basis, the Company uses fair value measures when analyzing asset impairment. Long-lived tangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present and the review indicates that the assets will not be fully recoverable, based on undiscounted estimated cash flows over the remaining amortization periods, their carrying values are reduced to estimated fair value. The Company uses an income approach and inputs that constitute level 3.  During the third quarter of each year, the Company evaluates goodwill for impairment at the reporting unit level. The Company uses a combination of discounted cash flows and other qualitative factors in accordance with ASU No. 2011-08 to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test.  This measurement is classified based on level 3 input.

The contingent earn-out in connection with the acquisition of Engage is $0.7 million and $0.9 million as of March 31, 2015 and December 31, 2014, respectively, and is recorded in accrued expenses in the condensed consolidated balance sheets. This earn-out is based on the potential earn-out consideration if certain revenue targets are achieved. The contingent earn-out balance was increased by $1.8 million in June 2014 in connection with the acquisition of Synchronite and $4.2 million in November 2014 in connection with the acquisition of CAO!. The contingent earn-out amounts are recorded in accrued expense on the condensed consolidated balance sheets as they are payable in 2015. The contingent earn-out relating to Synchronite is based on the fulfillment of a complete product integration and a minimum number of “Co-Browse” interactions per month. The contingent earn-out relating to CAO! is based on achieving certain target financial, strategic and integration objectives and milestones.

The changes in fair value of the Level 3 liabilities are as follows (amounts in thousands):

	Contingent Earn-Out
	March 31, 2015			December 31, 2014
Balance, Beginning of Period	$	6,940		$	1,660
Synchronite addition (see Note 8)	—			1,810
CAO! addition (see Note 8)	—			4,220
Cash payment	(350		)	(750		)
Balance, End of Period	$	6,590		$	6,940

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Derivative Financial Instruments

The Company is exposed to foreign exchange risks that in part are managed by using derivative financial instruments. Beginning January 2015, the Company entered into foreign currency forward contracts related to risks associated with foreign operations. The Company does not use derivatives for trading purposes and at March 31, 2015 has no derivatives that are designated as fair value hedges. Derivatives are recorded at their estimated fair values based upon Level 2 inputs. Derivatives designated and effective as cash flow hedges are reported as a component of other comprehensive income and reclassified to earnings in the same periods in which the hedged transactions impact earnings. Gains and losses related to derivatives not meeting the requirements of hedge accounting and the portion of derivatives related to hedge ineffectiveness are recognized in current earnings.

The following summarizes certain information regarding the Company’s outstanding foreign currency derivative contracts related primarily to intercompany receivables and payables for the periods presented (in thousands):

	March 31, 2015		March 31, 2014
Notional amount of foreign currency derivative contracts	$	38,236	$	—
Fair value of foreign currency derivatives contracts	$	423	$	—

The fair value of the Company's derivative instruments are summarized below (in thousands):

		Fair Value of Derivative Instruments
	Balance Sheet Location	March 31, 2015		March 31, 2014
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivatives contracts	Accrued expenses and other liabilities	$	423	$	—

The following summarizes certain information regarding the Company’s derivatives that are not designated or are not effective as hedges (in thousands):

	Gain (losses) on Derivative Instruments Recognized in Income Statement
	Location	March 31, 2015		March 31, 2014
Foreign currency derivatives contracts	Other expense	$	7	$	—

10. Commitments and Contingencies

Contractual Obligations

The Company leases facilities and certain equipment under agreements accounted for as operating leases. These leases generally require the Company to pay all executory costs such as maintenance and insurance. Rental expense for operating leases for the three months endedMarch 31, 2015 and 2014 was approximately $2.5 million and $2.2 million, respectively.

Employee Benefit Plans

The Company has a 401(k) defined contribution plan covering all eligible employees. The Company provides for employer matching contributions equal to 50% of employee contributions, up to the lesser of 5% of eligible compensation or $6,000. Matching contributions are deposited into the employee’s 401(k) account and are subject to 5 year graded vesting. Salaries and related expenses include $0.4 million and $0.3 million of employer matching contributions for the three months endedMarch 31, 2015 and 2014, respectively.

11. Stockholders' Equity

Common Stock

As of March 31, 2015, there were 100,000,000 shares of common stock authorized, and 57,039,125 shares issued and outstanding. As of December 31, 2014, there were 100,000,000 shares of common stock authorized, and 56,701,331 shares issued and outstanding. The par value for common shares is $0.001.

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Preferred Stock

As of March 31, 2015 and December 31, 2014, there were 5,000,000 shares of preferred stock authorized, and zero shares issued and outstanding. The par value for preferred shares is $0.001.

Stock Repurchase Program

On December 10, 2012, the Company’s Board of Directors approved a stock repurchase program through June 30, 2014. Under the stock repurchase program, the Company is authorized to repurchase shares of its common stock, in the open market or privately negotiated transactions, at times and prices considered appropriate by the Board of Directors depending upon prevailing market conditions and other corporate considerations. On March 13, 2014, the Company's Board of Directors increased the aggregate purchase price of the stock repurchase program from $30.0 million to $40.0 million. On July 23, 2014, the Company's Board of Directors increased the aggregate purchase price of the stock repurchase program from $40.0 million to $50.0 million. On March 5, 2015, the Company's Board of Directors extended the expiration date of the program out to December 31, 2016. There were 176,172 shares repurchased under this program during 2015, of which 33,360 shares were recorded in treasury stock at par on the condensed consolidated balance sheets as of March 31, 2015. As of March 31, 2015, approximately $8.2 million remained available for purchase under the program.

Stock-Based Compensation

The Company follows FASB ASC 718-10, “Stock Compensation,” which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.

The following table summarizes stock-based compensation expense related to employee stock options under ASC 718-10 included in Company’s statements of operations for the periods presented (amounts in thousands):

	Three Months Ended
	March 31,
	2015		2014
Cost of revenue	$	328	$	360
Sales and marketing expense	595		814
Product development expense	939		680
General and administrative expense	932		843
Total stock based compensation included in costs and expenses	$	2,794	$	2,697

The per share weighted average fair value of stock options granted during the three months ended March 31, 2015 and 2014 was $4.64 and $6.25, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Three Months Ended
	March 31,
	2015	2014
Dividend yield	0.0%	0.0%
Risk-free interest rate	1.3%	1.5%
Expected life (in years)	5	5
Historical volatility	49.7%	53.7%

A description of the methods used in the significant assumptions used to estimate the fair value of stock-based compensation awards follows:

Dividend yield – The Company uses 0% as it has never issued dividends and does not anticipate issuing dividends in the near term.

Risk-free interest rate – The Company uses the market yield on U.S. Treasury securities at five years with constant maturity, representing the current expected life of stock options in years.

Expected life – The Company uses historical data to estimate the expected life of a stock option.

Historical volatility – The Company uses a trailing five year from grant date to determine volatility.

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Stock Option Plans

During 1998, the Company established the Stock Option and Restricted Stock Purchase Plan (the “1998 Plan”). Under the 1998 Plan, the Board of Directors could issue incentive stock options or nonqualified stock options to purchase up to 5,850,000 shares of common stock. The 2000 Stock Incentive Plan (the “2000 Plan”) succeeded the 1998 Plan. Under the 2000 Plan, the options which had been outstanding under the 1998 Plan were incorporated in the 2000 Plan increasing the number of shares available for issuance under the plan by approximately 4,150,000, thereby reserving for issuance 10,000,000 shares of common stock in the aggregate.

The Company established the 2009 Stock Incentive Plan (as amended and restated, the “2009 Plan”) as a successor to the 2000 Plan. Under the 2009 Plan, the options which had been outstanding under the 2000 Plan were incorporated into the 2009 Plan and the Company increased the number of shares available for issuance under the plan by 6,000,000. The Company amended the 2009 stock incentive plan (the “Amended 2009 Plan”) effective June 7, 2012. The Amended 2009 Plan increased the number of shares authorized for issuance under the plan by an additional 4,250,000, thereby reserving for issuance 23,817,744 shares of common stock in the aggregate. Options to acquire common stock granted thereunder have 10-year terms. As of March 31, 2015, approximately 13,100,000 shares of common stock were reserved for issuance under the 2009 Plan (taking into account all option exercises through March 31, 2015).

Employee Stock Purchase Plan

In June 2010, the Company’s stockholders approved the 2010 Employee Stock Purchase Plan with 1,000,000 shares of common stock initially reserved for issuance. As of March 31, 2015, approximately 519,000 shares of common stock were reserved for issuance under the Employee Stock Purchase Plan (taking into account all share purchases through March 31, 2015).

Stock Option Activity

A summary of the Company’s stock option activity and weighted average exercise prices follows:

	Stock Option Activity				Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
	Options		Weighted Average Exercise Price
Balance outstanding at December 31, 2014	10,769,149		$	10.95
Granted	434,550		10.53
Exercised	(430,533	)	4.03
Cancelled or expired	(620,425	)	12.38
Balance outstanding at March 31, 2015	10,152,741		$	11.13	7.31	$	9,027
Options vested and expected to vest at March 31, 2015	8,600,976		$	11.13	7.01	$	8,766
Options exercisable at March 31, 2015	4,354,151		$	10.50	5.68	$	7,900

The total fair value of stock options exercised during the three months endedMarch 31, 2015 was approximately $1.1 million. As of March 31, 2015, there was approximately $25.6 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of approximately 2.6 years.

A summary of the status of the Company’s nonvested shares as of December 31, 2014, and changes during the three months endedMarch 31, 2015 is as follows:

	Options		Weighted Average Grant- Date Fair Value
Nonvested Shares at December 31, 2014	6,032,315		$	5.66
Granted	434,550		4.64
Vested	(47,850	)	5.10
Cancelled or expired	(620,425	)	6.09
Nonvested Shares at March 31, 2015	5,798,590		$	5.59

The total intrinsic value of nonvested options at March 31, 2015 was approximately $1.1 million.

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12. Legal Matters

The Company routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where the Company assesses the likelihood of loss as probable.

From time to time, the Company is involved in or subject to legal, administrative and regulatory proceedings, claims, demands and investigations arising in the ordinary course of business, including direct claims brought by or against the Company with respect to intellectual property, contracts, employment and other matters, as well as claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In addition, in the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosures related to such matter as appropriate and in compliance with ASC 450. The accruals or estimates, if any, resulting from the foregoing analysis, are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, the Company will, as applicable, adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.

From time to time, third parties assert claims against the Company regarding intellectual property rights, privacy issues and other matters arising out of the ordinary course of business. Although the Company cannot be certain of the outcome of any litigation or the disposition of any claims, nor the amount of damages and exposure, if any, that the Company could incur, the Company currently believes that the final disposition of all existing matters will not have a material adverse effect on our business, results of operations, financial condition or cash flows. In addition, in the ordinary course of our business, the Company is also subject to periodic threats of lawsuits, investigations and claims. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

General

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which are prepared in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that management believes are reasonable based upon the information available. We base these estimates on our historical experience, future expectations and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments that may not be readily apparent from other sources. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. These estimates and assumptions relate to estimates of the carrying amount of goodwill, intangibles, stock based-compensation, valuation allowances for deferred income taxes, accounts receivable, the expected term of a customer relationship, accruals and other factors. We evaluate these estimates on an ongoing basis. Actual results could differ from those estimates under different assumptions or conditions, and any differences could be material.

Overview

LivePerson was incorporated in the State of Delaware in November 1995 and the LivePerson service was introduced initially in November 1998. We provide online engagement solutions offering a cloud-based platform which enables businesses to proactively connect with consumers through chat, voice and content delivery, across multiple channels and screens, including websites, social media, tablets and mobile devices.  We are organized into two operating segments: Business and Consumer. The Business segment facilitates real-time online interactions — chat, voice and content delivery, across multiple channels and screens for global corporations of all sizes. The Consumer segment facilitates online transactions between independent service providers (“Experts”) and individual consumers (“Users”) seeking information and knowledge for a fee via real-time chat.

In order to sustain growth in these segments, our strategy is to expand our position as the leading provider of online engagement solutions that facilitate real-time assistance and expert advice. To accomplish this, we are focused on the following current initiatives:

• Expanding Business with Existing Customers and Adding New Customers. We are expanding our sales capacity by adding enterprise and midmarket sales agents. We have also expanded our efforts to retain existing self-service customers through increased interaction with them during the early stages of their usage of our services.

• Introducing New Products and Capabilities.   We are investing in product marketing, research and development and executive personnel to support our expanding efforts to build and launch new products and capabilities to support existing customer deployments, and to further penetrate our total addressable market. These investments are initially focused in the areas of online marketing and mobile consumer engagement enhanced data and reporting and chat transcript text analysis. Over time, we expect to develop and launch additional capabilities that leverage our existing market position as a leader in proactive, intelligence-driven online engagement.

• Expanding our International Presence. We continue to increase our investment in sales and support personnel in the United Kingdom, Asia-Pacific, Latin America and Western Europe, particularly France and Germany. We are also working with sales and support partners as we expand our investment in the Asia-Pacific region. We continue to improve the multi-language and translation capabilities within our hosted solutions to further support international expansion.

Key Metrics

Financial overview of the three months ended March 31, 2015 compared to the three months ended March 31, 2014:

• Total revenue increased 25% to $59.8 million from $47.8 million.

• Revenue from our Business segment increased 28% to $56.1 million from $43.9 million.

• Gross profit margin decreased to 72.8% from 75.5%.

• Cost and expenses increased 27% to $61.8 million from $48.8 million.

• Net loss increased to $2.1 million from net loss of $0.8 million.

• Revenue per enterprise and mid-market customer averaged $174,000 over the trailing twelve months ended March 31, 2015, a 3% sequential increase as compared to the $168,000 calculated for the period ended December 31, 2014. These figures are pro forma to exclude contributions from one large customer contract that ended.

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• Customer renewal rate for enterprise and mid-market customers was 89% over the trailing twelve months ended March 31, 2015, as compared to 91% over the trailing twelve months ended December 31, 2014.

Adjusted EBITDA and Adjusted Net Income

To provide investors with additional information regarding our financial results, we have disclosed adjusted EBITDA and adjusted net income which are non-GAAP financial measures. The tables below present a reconciliation of adjusted EBITDA and adjusted net income to net loss, the most directly comparable GAAP financial measures.

We have included adjusted EBITDA and adjusted net income in this Quarterly Report on Form 10-Q because these are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA and adjusted net income can provide a useful measure for period-to-period comparisons of our core business. Additionally, adjusted EBITDA is a key financial measure used by the compensation committee of our board of directors in connection with the payment of bonuses to our executive officers. Accordingly, we believe that adjusted EBITDA and adjusted net income provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Our use of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

• adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;

• adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and

• other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net loss and our other GAAP results. The following table presents a reconciliation of adjusted EBITDA for each of the periods indicated (amounts in thousands):

	Three Months Ended
	March 31,
	2015			2014
Reconciliation of Adjusted EBITDA
GAAP net loss	$	(2,058	)	$	(794	)
Amortization of purchased intangibles	2,152			1,058
Stock-based compensation	2,794			2,697
Depreciation	2,578			1,981
Benefit from income taxes	(228		)	(231		)
Other expense, net	231			83
Adjusted EBITDA	$	5,469		$	4,794

Our use of adjusted net income has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

• although amortization are non-cash charges, the assets being amortized may have to be replaced in the future, and adjusted net income does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

• adjusted net income does not consider the potentially dilutive impact of equity-based compensation;

• other companies, including companies in our industry, may calculate adjusted net income differently, which reduces its usefulness as a comparative measure.

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Because of these limitations, you should consider adjusted net income alongside other financial performance measures, including various cash flow metrics, net loss and our other GAAP results. The following table presents a reconciliation of adjusted net income for each of the periods indicated (amounts in thousands):

	Three Months Ended
	March 31,
	2015			2014
Reconciliation of Adjusted Net Income
GAAP net loss	$	(2,058	)	$	(794	)
Amortization of purchased intangibles	2,152			1,058
Stock-based compensation	2,794			2,697
Income tax effect of non-GAAP items (1)	(526		)	(422		)
Adjusted net income	$	2,362		$	2,539

⁽¹⁾The Company's income tax effect does not include discrete items.

Critical Accounting Policies and Estimates

The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating the reported consolidated financial results include the following:

Revenue Recognition

The majority of our revenue is generated from monthly service revenues and related professional services from the sale of the LivePerson services. Because we provide our application as a service, we follow the provisions of ASC 605-10-S99, “Revenue Recognition” and ASC 605-25, “Revenue Recognition with Multiple-Element Arrangements.” We charge a monthly fee, which varies by type of service, the level of customer usage and website traffic, and in some cases, the number of orders placed via our online engagement solutions.

For certain of our larger customers, we may provide call center labor through an arrangement with one or more of several qualified vendors. For most of these customers, we pass the fee we incur with the labor provider and our fee for the hosted services through to our customers in the form of a fixed fee for each order placed via our online engagement solutions. For these Pay for Performance (“PFP”) arrangements, in accordance with ASC 605-45, “Principal Agent Considerations,” we record revenue for transactions in which we act as an agent on a net basis, and revenue for transactions in which we act as a principal on a gross basis.

We also sell certain of the LivePerson services directly via Internet download.  These services are marketed as LiveEngage for small to medium-sized businesses, and are paid for almost exclusively by credit card.  Credit card payments accelerate cash flow and reduce our collection risk, subject to the merchant bank's right to hold back cash pending settlement of the transactions.  Sales of LiveEngage may occur with or without the assistance of an online sales representative, rather than through face-to-face or telephone contact that is typically required for traditional direct sales.

We recognize monthly service revenue based upon the fee charged for the LivePerson services, provided that there is persuasive evidence of an arrangement, no significant Company obligations remain, collection of the resulting receivable is probable and the amount of fees to be paid is fixed or determinable. Our service agreements typically have twelve month terms and, in some cases, are terminable or may terminate upon 30 to 90 days’ notice without penalty. When professional service fees add value to the customer on a standalone basis, we recognize professional service fees upon completion and customer acceptance. ASU 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates.  If a professional services arrangement does not qualify for separate accounting, we recognize the fees, and the related labor costs, ratably over the contracted period.

For revenue from our Consumer segment generated from online transactions between Experts and Users, we recognize revenue net of Expert fees in accordance with ASC 605-45, “Principal Agent Considerations,” due primarily to the fact that the Expert is the primary obligor. Additionally, we perform as an agent without any risk of loss for collection, and are not involved in selecting the Expert or establishing the Expert’s fee.  We collect a fee from the consumer and retain a portion of the fee, and then remit the balance to the Expert. Revenue from these transactions is recognized when there is persuasive evidence of an arrangement, no significant Company obligations remain, collection of the resulting receivable is probable and the amount of fees to be paid is fixed or determinable.

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Stock-Based Compensation

We follow ASC 718-10, “Stock Compensation,” which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.

As of March 31, 2015, there was approximately $25.6 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of approximately 2.6 years.

Accounts Receivable

Our customers are located primarily in the United States. We perform ongoing credit evaluations of our customers’ financial condition (except for customers who purchase the LivePerson services by credit card via Internet download) and have established an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends and other information that we believe to be reasonable, although they may change in the future. If there is a deterioration of a customer’s credit worthiness or actual write-offs are higher than our historical experience, our estimates of recoverability for these receivables could be adversely affected. Although our large number of customers limits our concentration of credit risk we do have several large customers. If we experience a significant write-off from one of these large customers, it could have a material adverse impact on our condensed consolidated financial statements. No single customer accounted for or exceeded 10% of our total revenue in the three months endedMarch 31, 2015 and 2014. One customer accounted for approximately 16% and 22% of accounts receivable as of March 31, 2015 and December 31, 2014, respectively. We increased our allowance for doubtful accounts by $0.1 million in the three months ended March 31, 2015, principally due to an increase in sales.

A large portion of receivables are due from larger corporate customers that typically have longer payment cycles.

Goodwill

In accordance with ASC 350, “Goodwill and Other Intangible Assets,” goodwill and indefinite-lived intangible assets are not amortized, but reviewed for impairment upon the occurrence of events or changes in circumstances that would reduce the fair value below its carrying amount. Goodwill is required to be tested for impairment at least annually. In September 2011, the FASB issued ASU No. 2011-08, Intangibles — Goodwill and Other (Topic 350). ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. If it is determined that the fair value of a reporting unit is more likely than not to be less than its carrying value (including unrecognized intangible assets) than it is necessary to perform the second step of the goodwill impairment test. The second step of the goodwill impairment test is judgmental in nature and often involves the use of significant estimates and assumptions. Similarly, estimates and assumptions are used in determining the fair value of other intangible assets. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and also the magnitude of any such charge. We perform internal valuation analysis and consider other market information that is publicly available. Estimates of fair value are primarily determined using discounted cash flows and market comparisons. These approaches use significant estimates and assumptions including projected future cash flows (including timing), discount rates reflecting the risk inherent in future cash flows, perpetual growth rates, determination of appropriate market comparables and the determination of whether a premium or discount should be applied to comparables.

We evaluate for goodwill impairment annually at September 30^th.At the end of the third quarter of 2014, we determined that it was not more-likely that the fair value of the reporting units are less than their carrying amount. Accordingly, we did not perform the two-step goodwill impairment test.

Impairment of Long-Lived Assets

In accordance with ASC 360-10, “Accounting for the Impairment or Disposal of Long-lived Assets,” long-lived assets, such as property, plant and equipment and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. The Company does not have any long-lived assets, including intangible assets, which it considered to be impaired.

Legal Contingencies

We are subject to legal proceedings and litigation arising in the ordinary course of business. Periodically, we evaluate the status of each legal matter and assess our potential financial exposure. If the potential loss from any legal proceeding or litigation is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Significant judgment

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is required to determine the probability of a loss and whether the amount of the loss is reasonably estimable. The outcome of any proceeding is not determinable in advance. As a result, the assessment of a potential liability and the amount of accruals recorded are based only on the information available at the time. As additional information becomes available, we reassess the potential liability related to the legal proceeding or litigation, and may revise our estimates. Any revisions could have a material effect on our results of operations. See Note 12, Legal Matters, of the Notes to the Consolidated Financial Statements additional information on our legal proceedings and litigation.

Recently Issued Accounting Standards

On February 18, 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”), which affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The standard amends the consolidation requirements in ASC 810. ASU 2015-02 is effective for fiscal periods beginning after December 15, 2015 for public companies, and early adoption is permitted. We do not expect to early adopt ASU 2015-02, which will be effective for our fiscal year ending December 31, 2016. We do not believe the standard will have a material impact on our condensed consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes most existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures).  We will adopt this guidance at the beginning of its first quarter of fiscal year 2017. Adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements or disclosures.

Revenue

The majority of our revenue is generated from monthly service revenues and related professional services from the sale of the LivePerson services. We charge a monthly fee, which varies by service and customer usage. The majority of our larger customers also pay a professional services fee related to implementation. A large proportion of our revenue from new customers comes from large corporations. These companies typically have more significant implementation requirements and more stringent data security standards. Such customers also have more sophisticated data analysis and performance reporting requirements, and are likely to engage our professional services organization to provide such analysis and reporting on a recurring basis.

Revenue from our Business segment accounted for 94% and 92% of total revenue for the three months endedMarch 31, 2015 and 2014, respectively. Revenue attributable to our monthly hosted Business services accounted for 90% of total Business revenue for the three months endedMarch 31, 2015 and 2014, respectively. Our service agreements typically have twelve month terms and, in some cases, are terminable or may terminate upon 30 to 90 days’ notice without penalty. Given the time required to schedule training for our customers’ operators and our customers’ resource constraints, we have historically experienced a lag between signing a customer contract and recognizing revenue from that customer. Although this lag typically ranges from 30 to 90 days, it may take more time between contract signing and recognizing revenue in certain situations.

Revenue from our Consumer segment is generated from online transactions between Experts and Users and is recognized net of Expert fees and accounted for approximately 6% and 8% of total revenue for the three months endedMarch 31, 2015 and 2014, respectively.  

We also have entered into contractual arrangements that complement our direct sales force and online sales efforts. These are primarily with call center service companies, pursuant to which LivePerson is paid a commission based on revenue generated by these service companies from our referrals. To date, revenue from such commissions has not been material.

Costs and Expenses

Our cost of revenue consists of:

• compensation costs relating to employees who provide customer support and implementation services to our customers;

• outside labor provider costs;

• compensation costs relating to our network support staff;

• depreciation of certain hardware and software;

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• allocated occupancy costs and related overhead;

• the cost of supporting our infrastructure, including expenses related to server leases, infrastructure support costs and Internet connectivity;

• the credit card fees and related payment processing costs associated with consumer and self-service customers; and

• amortization of certain intangibles.

Our sales and marketing expenses consist of compensation and related expenses for sales personnel and marketing personnel, online marketing, allocated occupancy costs and related overhead, advertising, sales commissions, public relations, promotional materials, travel expenses and trade show exhibit expenses.

Our general and administrative expenses consist primarily of compensation and related expenses for executive, accounting, legal, information technology and human resources personnel, allocated occupancy costs and related overhead, professional fees, provision for doubtful accounts and other general corporate expenses.

Our product development expenses consist primarily of compensation and related expenses for product development personnel, allocated occupancy costs and related overhead, outsourced labor and expenses for testing new versions of our software. Product development expenses are charged to operations as incurred.

During the three months endedMarch 31, 2015, we increased our allowance for doubtful accounts by approximately $0.1 million to approximately $1.4 million. During 2014, we increased our allowance for doubtful accounts by $0.1 million to approximately $1.3 million, principally due to an increase in the proportion of receivables due as a result of an increase in sales. A large proportion of receivables are due from larger corporate customers that typically have longer payment cycles. We base our allowance for doubtful accounts on specifically identified credit risks of customers, historical trends and other information that we believe to be reasonable. We adjust our allowance for doubtful accounts when accounts previously reserved have been collected.

Non-Cash Compensation Expense

The net non-cash compensation amounts are as follows:

	Three Months Ended
	March 31,
	2015		2014
	(in thousands)
Stock-based compensation expense related to ASC 718-10	$	2,794	$	2,697

Results of Operations

The Company is organized into two operating segments: Business and Consumer. The Business segment facilitates real-time online interactions — chat, voice and content delivery, across multiple channels and screens for global corporations of all sizes. The Consumer segment facilitates online transactions between Experts and Users seeking information and knowledge for a fee via real-time chat.

Comparison of the Three Months EndedMarch 31, 2015 and 2014

Revenue

	Three Months Ended
	March 31,
	2015		2014		% Change
	(in thousands)
Revenue by Segment:
Business	$	56,074	$	43,918	28	%
Consumer	3,696		3,910		(5	)%
Total	$	59,770	$	47,828	25	%

Our business revenue growth has traditionally been driven by a mix of revenue from new customers as well as expansion from existing customers. The mix of revenue between new and existing customers is consistent with prior quarters. Business revenue increased by 28% to $56.1 million in the three months endedMarch 31, 2015, from $43.9 million in the comparable

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period in 2014. The increase in revenue from new customers was approximately $8.6 million; revenue from existing customers who increased their use of our services was approximately $2.4 million, net of cancellations; and professional services revenue increased by approximately $1.2 million.

Consumer revenue decreased by 5% to $3.7 million in the three months ended March 31, 2015, from $3.9 million in the comparable period in 2014. The decrease was driven by the price charged per minute partially offset by an increase in the fees we charge experts.

Cost of Revenue - Business

Cost of revenue consists of compensation costs relating to employees who provide customer service to our customers, compensation costs relating to our network support staff, outside labor provider costs, the cost of supporting our server and network infrastructure, and allocated occupancy costs and related overhead.

	Three Months Ended
	March 31,
	2015				2014			% Change
	($ in thousands)
Cost of revenue - business	$	15,617			$	11,220		39	%
Percentage of total revenue	26		%		23		%
Headcount (at period end):	291			(1)	218			33	%

⁽¹⁾ Includes 67 employees as a result of the acquisition of CAO!

Cost of revenue increased by 39% to $15.6 million in the three months ended March 31, 2015, from $11.2 million in the comparable period in 2014. This increase in expense was primarily attributable to total compensation and related costs for additional and existing customer service, network operations personnel and external consultants in the amount of approximately $2.2 million, an increase in outside labor provider fees of approximately $1.1 million, and an increase in primary and backup server facilities and allocated overhead related to costs of supporting our server and network infrastructure of approximately $1.0 million as a result of increased revenue. The increase in the cost of revenue was due to the investment in enhancing our business continuity capabilities at our hosting facilities. Additionally, data collection and storage costs have increased in support of expanded scope and quality of the analytical reporting to our customers.

Cost of Revenue - Consumer

Cost of revenue consists of compensation costs relating to employees who provide customer service to Experts and Users, compensation costs relating to our network support staff, the cost of supporting our server and network infrastructure, credit card and transaction processing fees and related costs, and allocated occupancy costs and related overhead.

	Three Months Ended
	March 31,
	2015			2014			% Change
	($ in thousands)
Cost of revenue - consumer	$	637		$	515		24	%
Percentage of total revenue	1		%	1		%
Headcount (at period end)	19			12			58	%

Cost of revenue increased by 24% to $0.6 million in the three months ended March 31, 2015, from $0.5 million in the comparable period in 2014. The increase in expense is due to an increase in compensation costs relating to our network support staff of approximately $42,000.

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Sales and Marketing - Business

Our sales and marketing expenses consist of compensation and related expenses for sales and marketing personnel, as well as advertising, public relations, trade show exhibit expenses and allocated occupancy costs and related overhead.

	Three Months Ended
	March 31,
	2015				2014			% Change
	($ in thousands)
Sales and marketing - business	$	22,852			$	16,918		35	%
Percentage of total revenue	38		%		35		%
Headcount (at period end):	372			(1)	275			35	%

⁽¹⁾ Includes 67 employees as a result of the acquisition of CAO!

Sales and marketing expenses increased by 35% to $22.9 million in the three months ended March 31, 2015, from $16.9 million in the comparable period in 2014. The increase was primarily due to compensation and related costs for additional and existing sales and marketing personnel of approximately $4.6 million directly related to expanded headcount, and advertising, public relations and trade show exhibit expenses of approximately $0.3 million. Additionally, we continue to invest in our marketing and sales capabilities, as well as invest in our global sales team, global expansion and LiveEngage 2.0 product launch.

Sales and Marketing - Consumer

Our sales and marketing expenses consist of compensation and related expenses for marketing personnel, as well as online promotion, public relations and allocated occupancy costs and related overhead.

	Three Months Ended
	March 31,
	2015			2014			% Change
	($ in thousands)
Sales and marketing - consumer	$	1,442		$	1,477		(2	)%
Percentage of total revenue	2		%	3		%
Headcount (at period end):	9			5			80	%

Sales and marketing expenses decreased by 2% to $1.4 million in the three months endedMarch 31, 2015, from $1.5 million in the comparable period in 2014. The decrease is due to a more efficient allocation of advertising and promotional spending that resulted in a decrease in expenses.

General and Administrative

Our general and administrative expenses consist of compensation and related expenses for executive, accounting, legal, human resources and administrative personnel, professional fees and other general corporate expenses.

	Three Months Ended
	March 31,
	2015				2014			% Change
	($ in thousands)
General and administrative	$	10,164			$	9,449		8	%
Percentage of total revenue	17		%		20		%
Headcount (at period end):	127			(1)	93			37	%

⁽¹⁾ Includes 11 employees as a result of the acquisition of CAO!

General and administrative expenses increased by 8% to $10.2 million in the three months ended March 31, 2015, from $9.4 million in the comparable period in 2014. The increase was primarily due to compensation and related expenses of approximately $0.6 million.

Product Development

Our product development expenses consist of compensation and related expenses for product development personnel as well as allocated occupancy costs and related overhead and outsourced labor and expenses for testing new versions of our software.

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	Three Months Ended
	March 31,
	2015				2014			% Change
	($ in thousands)
Product development	$	9,800			$	8,951		9	%
Percentage of total revenue	16		%		19		%
Headcount (at period end):	263			(1)	201			31	%

⁽¹⁾ Includes 17 employees as a result of the acquisition of CAO!

Product development costs increased by 9% to $9.8 million in the three months ended March 31, 2015, from $9.0 million in the comparable period in 2014.  This increase relates to an increase in compensation and associated costs for additional and existing product development personnel of approximately $0.7 million to expand our product offerings. We continue to increase our investment investment in new product development efforts to expand future product offerings. We are also investing in partner programs that enable third-parties to develop value-added software applications for our existing and future customers.

Amortization of Purchased Intangibles

	Three Months Ended
	March 31,
	2015			2014			% Change
	($ in thousands)
Amortization of purchased intangibles	$	1,313		$	190		591	%
Percentage of total revenues	2		%	—		%

Amortization expense for purchased intangibles increased by 591% to $1.3 million in the three months endedMarch 31, 2015, from $0.2 million in the comparable period in 2014. The increase is primarily attributable to our 2014 acquisitions of CAO!, Synchronite, NexGraph, and our investments in technology licenses. Additional amortization expense in the amount of $0.8 million and $0.9 million is included in cost of revenue for the three months endedMarch 31, 2015 and 2014, respectively.

Other Expense

Other income (expense) consists of interest income on cash and cash equivalents, investment income and financial (expense) income which is a result of currency rate fluctuations associated with exchange rate movement of the U.S. dollar against the New Israeli Shekel, Pound Sterling, Euro, Australian Dollar and Japanese Yen.

	Three Months Ended
	March 31,
	2015			2014			% Change
	($ in thousands)
Other expense, net	$	(231	)	$	(83	)	178	%

The increase in other expense in the three months ended March 31, 2015 from the comparable period 2014 is attributable to an increase in financial expense of approximately $0.2 million. Interest income remained flat in the three months ended March 31, 2015 from the comparable period in 2014.

Benefit From Income Taxes

	Three Months Ended
	March 31,
	2015			2014			% Change
	($ in thousands)
Benefit from income taxes	$	(228	)	$	(231	)	(1	)%

We recognized a tax benefit for income taxes of $0.2 million for the three months endedMarch 31, 2015 and 2014, respectively. Our consolidated effective tax rate is impacted by the statutory income tax rates applicable to each of the jurisdictions in which we operate.

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Net Loss

We had a net loss of $2.1 million and $0.8 million for the three months endedMarch 31, 2015 and 2014, respectively. Revenue increased by approximately $11.9 million, while costs and expenses increased by approximately $13.1 million, contributing to an increase in net loss of approximately $1.3 million for the three months endedMarch 31, 2015.

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Liquidity and Capital Resources

	Three Months Ended
	March 31,
	2015			2014
	(in thousands)
Consolidated Statements of Cash Flows Data:
Cash flows used in operating activities	$	(7,580	)	$	(2,999	)
Cash flows used in investing activities	(1,783		)	(4,755		)
Cash flows provided by (used in) financing activities	977			(4,863		)

As of March 31, 2015, we had approximately $40.8 million in cash and cash equivalents, a decrease of approximately $8.5 million from December 31, 2014. The decrease is primarily attributable to net cash used in operations, net cash used in investing activities relating to purchases of fixed assets related to the build-out of our co-location facility and cash used to repurchase our common stock. This is partially offset by proceeds from the issuance of common stock in connection with the exercise of stock options by employees. We invest our cash in short-term money market funds.

Net cash used in operating activities was $7.6 million for the three months endedMarch 31, 2015 and consisted primarily of net loss, non-cash expenses related to ASC 718-10, amortization of purchased intangibles and depreciation, increases in accounts receivable and prepaid expenses, and decreases in accrued expenses and deferred revenue. Net cash used in operating activities was $3.0 million for the three months endedMarch 31, 2014 and consisted primarily of a net loss, a decrease in accounts payable, and increases in accounts receivable, prepaid expenses and accrued expenses partially offset by non-cash expenses related to ASC 718-10, amortization of intangibles and depreciation and an increase in prepaid expenses and decreases in accrued expenses and deferred revenue, partially offset by an increase in accounts payable.

Net cash used in investing activities was $1.8 million in the three months endedMarch 31, 2015 and was due primarily to the purchase of fixed assets for our co-location facilities. Net cash used in investing activities was $4.8 million in the three months endedMarch 31, 2014 and was due primarily to the purchase of fixed assets for our co-location facilities and our investments in technology assets, and our acquisitions of NexGraph.

Net cash provided by financing activities was $1.0 million in the three months endedMarch 31, 2015 and consisted primarily of the issuance of common stock and excess tax benefit in connection with the exercise of stock options by employees offset by the repurchase of our common stock. Net cash used in financing activities was $4.9 million in the three months endedMarch 31, 2014 and consisted primarily of the repurchase of our common stock offset by the proceeds from the issuance of common stock in connection with the exercise of stock options by employees.

We have incurred significant expenses to develop our technology and services, to hire employees in our customer service, sales, marketing and administration departments, and for the amortization of purchased intangible assets, as well as non-cash compensation costs. Historically, we incurred significant quarterly net losses from inception through June 30, 2003, significant negative cash flows from operations in our quarterly periods from inception through December 31, 2002 and negative cash flows from operations of $0.1 million in the quarterly period ended March 31, 2004. We also incurred a net loss and negative cash flow from operations in the quarterly periods ended March 31, 2013, March 31, 2014, and June 30, 2014. We incurred a net loss in the quarterly periods ended June 30, 2013, September 30, 2013, December 31, 2013, as well as in the quarterly periods ended September 30, 2014 and December 31, 2014. As of March 31, 2015, we had an accumulated deficit of approximately $94.7 million.

We anticipate that our current cash and cash equivalents will be sufficient to satisfy our working capital and capital requirements for at least the next twelve (12) months. However, we cannot assure you that we will not require additional funds prior to such time, and we would then seek to sell additional equity or debt securities through public financings, or seek alternative sources of financing. We cannot assure you that additional funding will be available on favorable terms, when needed, if at all. If we are unable to obtain any necessary additional financing, we may be required to further reduce the scope of our planned sales and marketing and product development efforts, which could materially adversely affect our business, financial condition and operating results. In addition, we may require additional funds in order to fund more rapid expansion, to develop new or enhanced services or products or to invest in or acquire complementary businesses, technologies, services or products.

Contractual Obligations and Commitments

We do not have any special purposes entities, and other than operating leases, which are described below, we do not engage in off-balance sheet financing arrangements.

We lease facilities and certain equipment under agreements accounted for as operating leases. These leases generally require us to pay all executory costs such as maintenance and insurance. Rental expense for operating leases for the three months endedMarch 31, 2015 and 2014, was approximately $2.5 million and $2.2 million, respectively.

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As of March 31, 2015, our principal commitments were approximately $22.7 million under various operating leases, of which approximately $7.9 million is due in 2015. We currently expect that our principal commitments for the year ending December 31, 2015 will not exceed $9.0 million in the aggregate. 

Our contractual obligations at March 31, 2015 are summarized as follows:

	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	$	22,693	$	9,566	$	9,981	$	3,146	$	—
Total	$	22,693	$	9,566	$	9,981	$	3,146	$	—

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Exchange Risks

As a result of the expanded scope of our Israeli operations, our currency rate fluctuation risk associated with the exchange rate movement of the U.S. dollar against the New Israeli Shekel (“NIS”) has increased. During the three months endedMarch 31, 2015, the U.S. dollar appreciated by approximately 13%, as compared to the NIS. During the three months endedMarch 31, 2015, expenses generated by our Israeli operations totaled approximately $13.5 million. During 2015, we hedged this foreign currency risk exposure. We actively monitor the movement of the U.S. dollar against the NIS, Pound Sterling, Euro, AUS dollar and Japanese Yen and have considered the use of financial instruments, including but not limited to derivative financial instruments, which could mitigate such risk. If we determine that our risk of exposure materially exceeds the potential cost of derivative financial instruments, we may continue to enter in to these types of investments. The functional currency of our wholly-owned Israeli subsidiaries, LivePerson Ltd. (formerly HumanClick Ltd.) and Kasamba Ltd., is the U.S. dollar; the functional currency of our operations in the United Kingdom is the Pound Sterling; the functional currency of our operations in the Netherlands, Germany and Italy is the Euro; the functional currency of our operations in Australia is the Australian Dollar; and the functional currency of our operations in Japan is the Japanese Yen. 

Collection Risk

Our accounts receivable are subject, in the normal course of business, to collection risks. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks. During the three months endedMarch 31, 2015, we increased our allowance for doubtful accounts by $0.1 million. During 2014, we increased our allowance for doubtful accounts from $1.2 million to approximately $1.3 million, principally due to an increase in sales. A larger proportion of receivables are due from larger corporate customers that typically have longer payment cycles. We base our allowance for doubtful accounts on specifically identified credit risks of customers, historical trends and other information that we believe to be reasonable. We adjust our allowance for doubtful accounts when accounts previously reserved have been collected.

Interest Rate Risk

Our investments consist of cash and cash equivalents. Therefore, changes in the market’s interest rates do not affect in any material respect the value of the investments as recorded by us.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial conditions or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2015. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2015 to ensure that the information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2015 identified in connection with the evaluation thereof by our management, including the Chief Executive Officer and Chief Financial Officer, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations of the Effectiveness of Internal Control

A control system, no matter how well conceived and operated, can only provide reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, have been detected.

Part II. Other Information

Item 1. Legal Proceedings

We routinely assess all of our litigation and threatened litigation as to the probability of ultimately incurring a liability, and record our best estimate of the ultimate loss in situations where we assess the likelihood of loss as probable.

From time to time, we are involved in or subject to legal, administrative and regulatory proceedings, claims, demands and investigations arising in the ordinary course of business, including direct claims brought by or against us with respect to intellectual property, contracts, employment and other matters, as well as claims brought against our customers for whom we have a contractual indemnification obligation. We accrue for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In addition, in the event we determine that a loss is not probable, but is reasonably possible, and it becomes possible to develop what we believe to be a reasonable range of possible loss, then we will include disclosures related to such matter as appropriate and in compliance with ASC 450. The accruals or estimates, if any, resulting from the foregoing analysis, are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, we will, as applicable, adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to our financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.

From time to time, third parties assert claims against us regarding intellectual property rights, privacy issues and other matters arising out of the ordinary course of business. Although we cannot be certain of the outcome of any litigation or the disposition of any claims, nor the amount of damages and exposure, if any, that we could incur, we currently believe that the final disposition of all existing matters will not have a material adverse effect on our business, results of operations, financial condition or cash flows. In addition, in the ordinary course of our business, we are also subject to periodic threats of lawsuits, investigations and claims. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors

Risks that could have a material and adverse impact on our business, results of operations and financial condition include the following: potential fluctuations in our quarterly revenue and operating results; competition in the markets for online sales, marketing and customer service solutions, and online consumer services; our ability to retain existing clients and attract new clients; risks related to new regulatory or other legal requirements that could materially impact our business; volatility of the value of certain currencies in relation to the U.S. dollar, particularly the currency of regions where we have operations; 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; impairments to goodwill that result in significant charges to earnings; responding to rapid technological change and changing client preferences; the adverse effect that the global economic downturn may have on our business and results of operations; our ability to retain key personnel, attract new personnel and to manage staff attrition; our ability to expand our operations internationally; risks related to the ability to successfully integrate past or potential future acquisitions; failures or security breaches in our services, those of our third party providers, or in the websites of our customers; risks related to the regulation or possible misappropriation of personal information belonging to our customers’ Internet users; dependence upon technology systems and third-party content that are beyond our control; privacy concerns relating to the Internet that could result in new legislation or negative public perception; legal liability and/or negative publicity for the services provided to consumers via our technology platforms; risks related to protecting our intellectual property rights or potential infringement of the intellectual property rights of third parties; risks related to technological or other defects distributing our services; increased allowances for doubtful accounts as a result of an increasing amount of receivables due from customers with greater credit risk; delays in our implementation cycles; risks associated with the recent volatility in the capital markets; our ability to secure additional financing to execute our business strategy; risks associated with our current or any future stock repurchase programs, including whether such programs will enhance long-term stockholder value, and whether such stock repurchases could increase the volatility

33

of the price of our common stock and diminish our cash reserves; our ability to license necessary third party software for use in our products and services, and our ability to successfully integrate third party software; changes in accounting principles generally accepted in the United States; our ability to maintain our reputation; risks related to our complex products; our recognition of revenue from subscriptions; our lengthy sales cycles; risks related to our operations in Israel, and the civil and political unrest in that region; natural catastrophic events and interruption to our business by man-made problems; the high volatility of our stock price; and risks related to our common stock being traded on more than one securities exchange. This list is intended to identify only certain of the principal factors that could have a material and adverse impact on our business, results of operations and financial condition. A more detailed description of each of these and other important risk factors can be found under the caption “Risk Factors” in our most recent Annual Report on Form 10-K filed on March 12, 2015 (the “Form 10-K”).

There are no material changes to the risk factors described in the Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Purchase of Equity Securities by the Issuer

A summary of the Company's repurchase activity for the three months ended March 31, 2015:

Period	Total Number of Shares Purchased (1) (2)	Average Price Paid per Share (1) (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) (2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or  Programs (1) (2) (3)
					$	10,304,721
1/1/2015 – 1/31/2015	33,360	$	13.74	33,360	9,846,361
2/1/2015 – 2/28/2015	142,812	11.20		142,812	8,246,866
3/1/2015 – 3/31/2015	—	—		—	8,246,866
Total	176,172	$	10.02	176,172	$	8,246,866

(1) On December 10, 2012, the Company announced that its Board of Directors approved a share repurchase program through June 30, 2014. Under the stock repurchase program, the Company was authorized to repurchase shares of the Company's common stock, in the open market or privately negotiated transactions, at times and prices considered appropriate by the Board of Directors depending upon prevailing market conditions and other corporate considerations.

(2) As of June 30, 2014, approximately $1.1 million remained available for purchases under the program as in effect at that time. On July 23, 2014, the Company's Board of Directors extended the expiration date of the program out to December 31, 2014 and also increased the aggregate purchase price of the stock repurchase program from $40.0 million to $50.0 million. On March 5, 2015, the Company's Board of Directors extended the expiration date of the program out to December 31, 2016. As of March 31, 2015, approximately $8.2 million remained available for purchases under the program.

(3) Transaction fees related to the share purchases are deducted from the total remaining allowable expenditure amount.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

34

ITEM 6. EXHIBITS

The following exhibits are filed as part of this Quarterly Report on Form 10-Q:

10.1*	Employment agreement between LivePerson and Dustin Dean, dated February 25, 2015.
10.2*	Amendment to the employment agreement between LivePerson and Dustin Dean, dated March 27, 2015.
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
101.INS†	XBRL Instance Document
101.SCH†	XBRL Taxonomy Extension Schema Document
101.CAL†	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF†	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB†	XBRL Taxonomy Extension Label Linkbase Document
101.PRE†	XBRL Taxonomy Extension Presentation Linkbase Document

*    Management contract or compensatory plan or arrangement.

**    These certifications are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference in any filing we make under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings.

†    In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		LIVEPERSON, INC.
		(Registrant)
Date:	May 11, 2015	By:	/s/ ROBERT P. LOCASCIO
		Name:	Robert P. LoCascio
		Title:	Chief Executive Officer (principal executive officer)
Date:	May 11, 2015	By:	/s/ DANIEL R. MURPHY
		Name:	Daniel R. Murphy
		Title:	Chief Financial Officer (principal financial and accounting officer)

36

EXHIBIT INDEX

EXHIBIT
10.1*	Employment agreement between LivePerson and Dustin Dean, dated February 25, 2015.
10.2*	Amendment to the employment agreement between LivePerson and Dustin Dean, dated March 27, 2015.
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
101.INS†	XBRL Instance Document
101.SCH†	XBRL Taxonomy Extension Schema Document
101.CAL†	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF†	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB†	XBRL Taxonomy Extension Label Linkbase Document
101.PRE†	XBRL Taxonomy Extension Presentation Linkbase Document

*    Management contract or compensatory plan or arrangement.

**    These certifications are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference in any filing we make under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings.

†    In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.

37

EX-10.1

February 25, 2015

Dustin Dean

Dear Dustin:

Congratulations on the completion of your assignment in Australia! As per your Assignment Letter, as extended and dated August 13, 2013, we are repatriating you back to the US effective March 1, 2015.

Repatriation Provisions

Attached to this letter is a Summary of Repatriation Provisions, which details the assistance to be provided by the company for the duration of your repatriation. You are required to review this entire document, initial each page, sign this page as indicated below, and return fully executed copies as instructed herein.

Summary

The terms and conditions of this letter and the provisions of the company’s policy are subject to change at any time at the company’s sole discretion.

Please acknowledge your understanding and acceptance of this offer letter by signing below and returning to Lynn Gibson.

Sincerely,

/s/ Daryl J. Carlough	3/3/2015
Approving Signatory Name – Company Rep.	Date
Signature
/s/ Dustin Dean	3/3/2015
Approving Signatory Name – Dustin Dean	Date
Signature

By signing this agreement, you acknowledge that you read, understand, and agree to the terms and conditions.

475 10^th Avenue, 5^th Floor, New York, NY 10018 www.liveperson.com t 212.609.4200 f 212.609.4201

REPATRIATION PROVISIONS

COMPENSATION
Base Salary	You remain on US payroll and will be subject to all applicable U.S tax withholdings required by law. As a reflection of your promotion to EVP, Field Organization you will be paid salary at rate of $13,541.66 per pay period according to our payroll practices (we currently pay salary on a semimonthly basis: the 15th and last day of each month), which annualizes to $325,000 USD.
Incentive Target	The annual Incentive Compensation (part of On Target Earnings) for your Sales Compensation Plan (“Plan”) is $325,000 USD. You will be compensated by the Company in accordance with the terms of the Plan, as it is amended from time to time. LivePerson reserves the right to amend the plan at any time.
Hypothetical Tax	Deduction will terminate as of March 1, 2015
Expatriate Allowance	Payment of allowances will terminate as of March 1, 2015.
Education Allowance	Payment of allowances will terminate as of March 1, 2015.
Health Insurance	You will be eligible to enroll in the LivePerson U.S. health and disability insurance programs as of March 1, 2015 subject to the terms and conditions of the applicable plans and policies. You will remain on the NIB Health Fund until June 30, 2015.
Vacation	You will be eligible for vacation in accordance with LivePerson’s vacation policy as it exists from time to time.  You will accrue vacation at the rate of 1.66 days vacation per month (4 weeks per year).
IMMIGRATION
Immigration Services	The company will pay any associated costs to deregister the employee and accompanying family member as the end of the international assignment.
REPATRIATION RELOCATION LOGISTICS

2

End of Assignment Bonus	Special one-time only bonus of $40,625 USD (equivalent to one and a half month’s salary) paid through the home country payroll within 30 days of your March 1, 2015 assignment end date subject to U.S. tax withholding.
Repatriation Allowance	A net repatriation allowance of up to $50,000 USD for reasonable costs of relocating you and your family and household effects which will include (but not be limited to) the following expenses; paid through home country payroll subject to U.S. tax withholding on those amounts reimbursed by the company after March 1, 2015 and not considered deductible under current IRS regulations. All expenses must be pre-approved by LivePerson. If you voluntarily terminate your employment within eighteen (18) months of the March 1, 2015 return date to the U.S. company, you will be responsible for repaying LivePerson for the total amount paid towards the Repatriation Allowance. You agree that the amount owing to the Company is a legal debt and obligation and that the amount owed may be partially offset against and deducted from any final payroll check.
1)End of Assignment Travel	One way travel to home location for employee and accompanying family members. Covered costs include air travel, ground transportation to/from airports, and means.

3

2)Household Goods	Allowable expenses may include: •Air and surface shipments. •Storage in transit as required up to 60 days. •Insurance protection on your household goods up to USD $350,000. You will be required to complete a declared valuation of all your household goods, whether shipped or stored, for insurance purposes. •Delivery of goods stored at home (not shipped to assignment location) for up to 90 days following the end of assignment. •Purchase of furniture (which may be subject to tax withholding onamounts reimbursed by the company and not considered deductible under current IRS regulations). •Others reasonable expenses as agreed in advance.
3)Temporary Accommodations	Temporary housing at home or host location may be provided (as required) based on disposition of host country housing, packing and shipment of household goods and availability of home country housing. Rental car for up to one month.
4)Home Finding Trip	One home finding trip for employee and spouse/partner; air (economy class), meals, lodging, and ground transportation. Actual expenses for airfare, hotel, transportation, and meals will be reimbursed.
Family Travel Allowance	LivePerson will reimburse your “out of pocket” costs to purchase reasonable class airfares, in compliance with the LivePerson Travel and Entertainment Expense Reimbursement Policy, for up to $5,000 USD for a 12-month period commencing from June 1, 2015.

Tax Equalization

As a result of your repatriation, you will be subject to the Company tax equalization policy (“Tax Policy”). The Company will equalize your tax liability for compensation received as part of your Expatriate Assignment through March 1, 2015.

4

You will be responsible for your U.S. income, state income, and U.S. Social Security taxes on your base salary, incentive awards, stock options, and your personal income and any gains derived from your investments. You will be responsible for remitting payment of tax on your income as required by U.S. tax law.

For eligible compensation paid to you through March 1, 2015, the Company will be responsible for the payment/remittance of actual Host Country income and social taxes on your base, bonus, other incentive compensation, and international assignment allowances. This will also include taxes that may be due on the vesting of stock options during the period July 1, 2013 through March 1, 2015 up to a maximum of $10,000 USD. The payment of all Host Country taxes will also apply to any and all future residual tax liabilities related to your prior employment in the Host Country.

You will receive a Tax Equalization calculation for each calendar year of your assignment and for the years following repatriation where it is necessary to reconcile the Company’s versus your obligation due to the presence of “trailing” allowances, payments, and credits.

As a result of your continued global travel and work we expect that you will have the ability to release some of the excess US foreign tax credits without creating additional tax liabilities in the foreign countries. This is a large benefit to the company and as such the company is willing to continue to support your global tax return preparation needs while this benefit remains. This will relieve you of the need to calculate the foreign tax credit liabilities as this will be performed by McGladrey at the same time they prepare your US tax return. McGladrey will also calculate how much of the refund is related to the foreign tax credit and advise you and the company of the amount due to the company as related to the credits. The company requests that you keep a thorough travel log for your work days outside the U.S. this is not limited to the country of your foreign assignment, any work days outside the U.S. can release these credits. This benefit will be assessed annually to determine when this assistance will no longer be needed.

A tax settlement amount may be due to/from the Company as a result. In is expected that any tax settlement amount be made within 60 days of receipt of the settlement calculation whether due to, or from, the Company.

5

EX-10.2

March 27, 2015

Dustin Dean

Dear Dustin:

In regards to the Repatriation Letter dated February 25, 2015 and signed March 3, 2015 we are documenting the following amendments.

End of Assignment Bonus

The special one-time only bonus is corrected to be a bonus of $4,000 USD (the “Correction”) paid through the home country payroll subject to U.S. tax withholdings. This is equivalent to the difference between one and a half month’s base salary and allowances under your Expat Assignment Letter (as extended August 13, 2104) and the base salary outlined your Repatriation Letter.

Salary Adjustment

As you received a total payment of $40,625 USD on March 13, 2015 (the “Payment”), you agree that the difference between the Payment and the Correction is an amount owing to the Company is a legal debt and obligation and that the amount owed may be partially offset against and deducted from your future wages.

As a result, will begin a salary sacrifice program effective April 1, 2015 and continuing for 12 consecutive months to offset your annualized compensation in repayment of the debt. The deduction will be equal to $1,526 per pay period for the duration of the 12 month period, unless otherwise agreed upon in writing by you and LivePerson.

Please acknowledge your understanding and acceptance of this offer letter by signing below and returning to Lynn Gibson.

Sincerely,

/s/ Daryl J. Carlough	3/30/2015
Approving Signatory Name – Company Rep.	Date
Signature
/s/ Dustin Dean	3/31/2015
Approving Signatory Name – Dustin Dean	Date
Signature

By signing this agreement, you acknowledge that you read, understand, and agree to the terms and conditions.

475 10^th Avenue, 5^th Floor, New York, NY 10018 www.liveperson.com t 212.609.4200 f 212.609.4201

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Robert P. LoCascio, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of LivePerson, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 11, 2015	By:	/s/ ROBERT P. LOCASCIO
		Name:	Robert P. LoCascio
		Title:	Chief Executive Officer (principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Daniel R. Murphy, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of LivePerson, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 11, 2015	By:	/s/ DANIEL R. MURPHY
		Name:	Daniel R. Murphy
		Title:	Chief Financial Officer (principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert P. LoCascio, Chief Executive Officer of LivePerson, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Quarterly Report of the Company on Form 10-Q for the period ended March 31, 2015, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 11, 2015	By:	/s/ ROBERT P. LOCASCIO
		Name:	Robert P. LoCascio
		Title:	Chief Executive Officer (principal executive officer)

This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates it by reference.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel R. Murphy, Chief Financial Officer of LivePerson, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Quarterly Report of the Company on Form 10-Q for the period ended March 31, 2015, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 11, 2015	By:	/s/ DANIEL R. MURPHY
		Name:	Daniel R. Murphy
		Title:	Chief Financial Officer (principal financial officer)

This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates it by reference.

XML

Property and Equipment (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	$ 68,700	$ 64,732
Less: accumulated depreciation	(47,727)	(45,149)
Total	20,973	19,583
Computer Equipment And Software [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	59,122	55,293
Furniture, Equipment and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	$ 9,578	$ 9,439

XML

Stockholders' Equity (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014	Jun. 30, 2010	Jul. 23, 2014	Mar. 13, 2014	Dec. 10, 2012
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract]
Common stock, shares authorized	100,000,000		100,000,000
Common stock, shares issued (in shares)	57,039,125		56,701,331
Common stock, shares outstanding (in shares)	54,584,170		54,484,760
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract]
Preferred stock, shares authorized	5,000,000		5,000,000
Preferred stock, shares issued (in shares)	0		0
Preferred stock, shares outstanding (in shares)	0		0
Preferred stock, par value (in dollars per share)	$ 0.001		$ 0.001
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Sharebased Compensation Arrangement By Sharebased Payment Award Options Nonvested Aggregate Intrinsic Value	$ 1,100,000
Treasury Stock, Shares	33,360
Weighted average fair value of stock options granted	$ 4.64	$ 6.25
Dividend yield	0.00%	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	5 years	5 years
Share-based Compensation Arrangement By Share-based Payment Award, Fair Value Assumptions, Period Used To Determine Volatility	5 years
Stock option term	10 years
Total value of stock options exercised	1,100,000
Incentive Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to nonvested share-based compensation arrangements	25,600,000
Weighted average recognition period of unrecognized compensation cost	2 years 7 months 6 days
1998 Plan [Member] | Incentive Stock Option [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock available for issuance	5,850,000
2000 Plan [Member] | Incentive Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in number of shares of common stock available for issuance	4,150,000
1998 and 2000 Plan [Member] | Incentive Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock available for issuance	10,000,000
2009 Plan [Member] | Incentive Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock available for issuance	13,100,000
Increase in number of shares of common stock available for issuance	6,000,000
2010 Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock available for issuance	519,000			1,000,000
2009 Plan [Member] | 2009 Plan [Member] | Incentive Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock available for issuance	23,817,744
Increase in number of shares of common stock available for issuance	4,250,000
2012 Stock Repurchase Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, authorized amount					50,000,000.0	40,000,000.0	30,000,000.0
Stock repurchased during period, shares	176,172
Stock repurchase program, remaining authorized repurchase amount	$ 8,200,000

XML

Fair Value Measurements Derivative Financial Instruments (Details) (Foreign Currency Derivatives Contracts [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Derivative [Line Items]
Notional amount	$ 38,236		$ 0
Fair value	423		0
Accrued Expenses And Other Liabilities [Member] | Not Designated as Hedging Instrument [Member]
Derivative [Line Items]
Derivative liabilities	423		0
Other Expense [Member]
Derivative [Line Items]
Gain (losses) on derivative instruments	$ 7	$ 0

XML

Segment Information (Revenues Attributable to Domestic and Foreign Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Segment Reporting Information [Line Items]
Revenue	$ 59,770		$ 47,828
United States [Member]
Segment Reporting Information [Line Items]
Revenue	41,442		31,098
Other Americas [Member]
Segment Reporting Information [Line Items]
Revenue	2,703	[1]	2,150	[1]
Americas [Member]
Segment Reporting Information [Line Items]
Revenue	44,145		33,248
EMEA [Member]
Segment Reporting Information [Line Items]
Revenue	11,784	[2]	10,515	[2]
APAC [Member]
Segment Reporting Information [Line Items]
Revenue	$ 3,841	[3]	$ 4,065	[3]

[1] Canada, Latin America and South America

[2] Europe, the Middle East and Africa (“EMEA”)

[3] Asia-Pacific (“APAC”)

XML

Acquisitions (Tables)

3 Months Ended

Mar. 31, 2015

Synchronite, LLC [Member]

Business Acquisition [Line Items]

Components of Intangible Assets

The components of the intangible assets are as follows (amounts in thousands): 

	Weighted Average Useful Life (Months)	Amount
Technology	120	$	1,082
Trade-name	48	62
Customer relationships	84	247
Non-compete agreements	36	60
		$	1,451

Contact At Once! [Member]

Business Acquisition [Line Items]

Purchase Price Preliminary Allocation

Management’s preliminary allocation of the purchase price in connection with the CAO! acquisition is as follows (amounts in thousands):

Cash	$	480
Accounts receivable	2,694
Other currents assets	289
Property and equipment	231
Other assets	43
Intangible assets	20,400
Goodwill	45,064
	69,201
Liabilities assumed	(2,203		)
Total purchase price consideration	$	66,998

Components of Intangible Assets

The components of the intangible assets are as follows (amounts in thousands):

	Weighted Average Useful Life (Months)	Amount
Technology	96	$	8,400
Trade-name	12	500
Customer relationships	120	10,700
Non-compete agreements	36	800
		$	20,400

XML

Stockholders' Equity (Weighted Average Assumptions of Fair Value Options Using Black-Scholes Option-Pricing Model) (Details)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield	0.00%	0.00%
Risk-free interest rate	1.30%	1.50%
Expected life (in years)	5 years	5 years
Historical volatility	49.70%	53.70%

XML

Acquisitions (Purchase Price Preliminary Allocation) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Nov. 07, 2014
Business Acquisition [Line Items]
Goodwill	$ 80,310	$ 80,848	$ 32,724
Contact At Once! [Member]
Business Acquisition [Line Items]
Cash				480
Accounts receivable				2,694
Other currents assets				289
Property and equipment				231
Other assets				43
Intangible assets				20,400
Goodwill				45,064
Total assets				69,201
Liabilities assumed				(2,203)
Total purchase price consideration				$ 66,998

XML

Goodwill and Intangible Assets (Summary of Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 50,348	$ 50,187
Accumulated Amortization	(19,719)		(17,567)
Intangibles, net	30,629		32,620
Technology [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	28,005	27,844
Accumulated Amortization	(12,379)		(11,303)
Intangibles, net	15,626		16,541
Weighted Average Amortization Period	5 years 3 months 18 days		5 years 3 months 18 days
Customer relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	16,008	16,008
Accumulated Amortization	(4,818)		(4,055)
Intangibles, net	11,190		11,953
Weighted Average Amortization Period	7 years 10 months 18 days		7 years 10 months 18 days
Trade names [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,287	1,287
Accumulated Amortization	(946)		(817)
Intangibles, net	341		470
Weighted Average Amortization Period	2 years 9 months 12 days		2 years 9 months 12 days
Non-compete agreements [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,446	1,446
Accumulated Amortization	(721)		(625)
Intangibles, net	725		821
Weighted Average Amortization Period	2 years 3 months 12 days		2 years 3 months 12 days
Patents [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	3,290	3,290
Accumulated Amortization	(584)		(500)
Intangibles, net	2,706		2,790
Weighted Average Amortization Period	9 years 10 months 18 days		9 years 10 months 18 days
Other [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	312	312
Accumulated Amortization	(271)		(267)
Intangibles, net	$ 41		$ 45
Weighted Average Amortization Period	3 years		3 years

XML

Stockholders' Equity (Summary of Status of Nonvested Shares) (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Shares
Nonvested Shares at December 31, 2014	6,032,315
Granted	434,550
Vested	(47,850)
Cancelled or expired	(620,425)
Nonvested Shares at March 31, 2015	5,798,590
Weighted Average Grant-Date Fair Value
Nonvested Shares at December 31, 2014	$ 5.66
Granted	$ 4.64
Vested	$ 5.10
Cancelled or expired	$ 6.09
Nonvested Shares at March 31, 2015	$ 5.59

XML

Commitments and Contingencies (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Rental expense for operating leases	$ 2,500,000	$ 2,200,000
Defined benefit plan employer matching contribution on first five percent of employee compensation	50.00%
Percentage of employees' eligible compensation for employer matching contribution	5.00%
Defined benefit plan employer contribution limit	6,000
Defined benefit plan employer contribution vesting period	5 years
Defined benefit plan employer contribution	$ 400,000	$ 300,000

XML

Net Loss Per Share

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per Share

The Company calculates earnings per share (“EPS”) in accordance with the provisions of ASC 260-10 and the guidance of SEC Staff Accounting Bulletin (“SAB”) No. 98. Under ASC 260-10, basic EPS excludes dilution for common stock equivalents and is computed by dividing net income or loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. All options, warrants or other potentially dilutive instruments issued for nominal consideration are required to be included in the calculation of basic and diluted net income attributable to common stockholders. Diluted EPS is calculated using the treasury stock method and reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and resulted in the issuance of common stock.

Diluted net loss per common share for the three months ended March 31, 2015 and 2014 does not include the effect of options to purchase 10,152,741 and 9,678,582 shares of common stock, respectively, as the effect of their inclusion is anti-dilutive.

A reconciliation of shares used in calculating basic and diluted earnings per share follows:

	Three Months Ended
	March 31,
	2015	2014
Basic	56,291,383	54,666,535
Effect of assumed exercised options	—	—
Diluted	56,291,383	54,666,535

XML

Acquisitions (Components of Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended	0 Months Ended
	Mar. 31, 2015	Dec. 31, 2014	Nov. 07, 2014	Jun. 02, 2014
Contact At Once! [Member]
Business Acquisition [Line Items]
Intangible assets			$ 20,400
Synchronite, LLC [Member]
Business Acquisition [Line Items]
Intangible assets	1,450			1,451
Technology [Member]
Business Acquisition [Line Items]
Weighted average useful life	5 years 3 months 18 days	5 years 3 months 18 days
Technology [Member] | Contact At Once! [Member]
Business Acquisition [Line Items]
Weighted average useful life			96 months
Intangible assets			8,400
Technology [Member] | Synchronite, LLC [Member]
Business Acquisition [Line Items]
Weighted average useful life				120 months
Intangible assets				1,082
Trade Names [Member]
Business Acquisition [Line Items]
Weighted average useful life	2 years 9 months 12 days	2 years 9 months 12 days
Trade Names [Member] | Contact At Once! [Member]
Business Acquisition [Line Items]
Weighted average useful life			12 months
Intangible assets			500
Trade Names [Member] | Synchronite, LLC [Member]
Business Acquisition [Line Items]
Weighted average useful life				48 months
Intangible assets				62
Customer Relationships [Member] | Contact At Once! [Member]
Business Acquisition [Line Items]
Weighted average useful life			120 months
Intangible assets			10,700
Customer Relationships [Member] | Synchronite, LLC [Member]
Business Acquisition [Line Items]
Weighted average useful life				84 months
Intangible assets				247
Non-compete Agreements [Member]
Business Acquisition [Line Items]
Weighted average useful life	2 years 3 months 12 days	2 years 3 months 12 days
Non-compete Agreements [Member] | Contact At Once! [Member]
Business Acquisition [Line Items]
Weighted average useful life			36 months
Intangible assets			800
Non-compete Agreements [Member] | Synchronite, LLC [Member]
Business Acquisition [Line Items]
Weighted average useful life				36 months
Intangible assets				$ 60

XML

Net Loss Per Share (Narrative) (Details)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Effect of option to purchase share of common stock on diluted net income per share	10,152,741	9,678,582

XML

Revenue Recognition (Details)	3 Months Ended
	Mar. 31, 2015
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Typical service agreements	12 months
Minimum [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Typical service agreements termination notice period	30 days
Maximum [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Typical service agreements termination notice period	90 days

XML

Fair Value Measurements (Details) (Recurring [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended	0 Months Ended
	Mar. 31, 2015	Dec. 31, 2014	Jun. 02, 2014	Nov. 07, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	$ 3,088	$ 3,987
Liabilities, Fair Value Disclosure	7,013	6,940
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	3,088	3,987
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, Fair Value Disclosure	423	0
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, Fair Value Disclosure	6,590	6,940
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	3,088	3,987
Money Market Funds [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	3,088	3,987
Contingent Earn-Out [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, Fair Value Disclosure	6,590	6,940
Contingent Earn-Out [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, Fair Value Disclosure	6,590	6,940
Foreign Currency Derivatives Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, Fair Value Disclosure	423	0
Foreign Currency Derivatives Contracts [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, Fair Value Disclosure	423	0
Engage [Member] | Contingent Earn-Out [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, Fair Value Disclosure	700	900
Synchronite, LLC [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in contingent consideration	0	1,810
Synchronite, LLC [Member] | Contingent Earn-Out [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in contingent consideration			1,800
Contact At Once! [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in contingent consideration	0	4,220
Contact At Once! [Member] | Contingent Earn-Out [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in contingent consideration				$ 4,200

XML

Net Loss Per Share (Reconciliation of Shares Used in Calculating Basic and Diluted Earnings Per Share) (Details)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Basic	56,291,383	54,666,535
Effect of assumed exercised options	0	0
Diluted	56,291,383	54,666,535

XML

Segment Information (Narrative) (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2013
Segment Reporting [Abstract]
Number of operating segments	2
Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	16.00%	22.00%

XML

Revenue Recognition

3 Months Ended

Mar. 31, 2015

Revenue Recognition [Abstract]

Revenue Recognition

Revenue Recognition 

The majority of the Company’s revenue is generated from monthly service revenues and related professional services from the sale of the LivePerson services. Because the Company provides its application as a service, the Company follows the provisions of FASB Accounting Standards Codification (“ASC”) 605-10-S99, “Revenue Recognition” and ASC 605-25, “Revenue Recognition with Multiple-Element Arrangements.” The Company charges a monthly fee, which varies by type of service, the level of customer usage and website traffic, and in some cases, the number of orders placed via the Company’s online engagement solutions.

For certain of the Company’s larger customers, the Company may provide call center labor through an arrangement with one or more of several qualified vendors. For most of these customers, the Company passes the fee it incurs with the labor provider and its fee for the hosted services through to its customers in the form of a fixed fee for each order placed via the Company’s online engagement solutions. For these Pay for Performance (“PFP”) arrangements, in accordance with ASC 605-45, “Principal Agent Considerations,” the Company records revenue for transactions in which it acts as an agent on a net basis, and revenue for transactions in which it acts as a principal on a gross basis.

The Company also sells certain of the LivePerson services directly via Internet download.  These services are marketed as LiveEngage for small to medium-sized businesses, and are paid for almost exclusively by credit card.  Credit card payments accelerate cash flow and reduce the Company’s collection risk, subject to the merchant bank's right to hold back cash pending settlement of the transactions.  Sales of LiveEngage may occur with or without the assistance of an online sales representative, rather than through face-to-face or telephone contact that is typically required for traditional direct sales.

The Company recognizes monthly service revenue based upon the fee charged for the LivePerson services, provided that there is persuasive evidence of an arrangement, no significant Company obligations remain, collection of the resulting receivable is probable and the amount of fees to be paid is fixed or determinable. The Company’s service agreements typically have twelve month terms and, in some cases, are terminable or may terminate upon 30 to 90 days’ notice without penalty. When professional service fees add value to the customer on a standalone basis, the Company recognizes professional service fees upon completion and customer acceptance. ASU 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) best estimated selling price. If a professional services arrangement does not qualify for separate accounting, the Company recognizes the fees, and the related labor costs, ratably over the contracted period.

For revenue from the Company's Consumer segment generated from online transactions between Experts and Users, the Company recognizes revenue net of the Expert fees in accordance with ASC 605-45, “Principal Agent Considerations,” due primarily to the fact that the Expert is the primary obligor. Additionally, the Company performs as an agent without any risk of loss for collection, and is not involved in selecting the Expert or establishing the Expert’s fee. The Company collects a fee from the User and retains a portion of the fee, and then remits the balance to the Expert. Revenue from these transactions is recognized when there is persuasive evidence of an arrangement, no significant Company obligations remain, collection of the resulting receivable is probable and the amount of fees to be paid is fixed and determinable.

XML

Segment Information (Summary of Financial Information by Segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Revenue
Hosted services – Business	$ 50,613		$ 39,680
Hosted services – Consumer	3,696		3,910
Professional services	5,461		4,238
Revenue	59,770		47,828
Cost of revenue	16,254	[1],[2],[3]	11,735	[1],[2],[3]
Sales and marketing	24,294	[1],[3]	18,395	[1],[3]
Amortization of purchased intangibles	1,313		190
Unallocated corporate expenses	19,964		18,450
Operating income (loss)	(2,055)		(942)
Business [Member]
Revenue
Hosted services – Business	50,613		39,680
Professional services	5,461		4,238
Revenue	56,074		43,918
Cost of revenue	15,617		11,220
Sales and marketing	22,852		16,918
Amortization of purchased intangibles	1,313		190
Operating income (loss)	16,292		15,590
Consumer [Member]
Revenue
Hosted services – Consumer	3,696		3,910
Revenue	3,696		3,910
Cost of revenue	637		515
Sales and marketing	1,442		1,477
Operating income (loss)	1,617		1,918
Corporate [Member]
Revenue
Unallocated corporate expenses	19,964		18,450
Operating income (loss)	$ (19,964)		$ (18,450)

[1] Amounts include depreciation expense as follows: Cost of revenue $1,732 and $1,445 for the three months ended September 30, 2014 and 2013, respectively and $4,776 and $4,565 for the nine months ended September 30, 2014 and 2013, respectively, Sales and marketing $195 and $23 for the three months ended September 30, 2014 and 2013, respectively and $603 and $68 for the nine months ended September 30, 2014 and 2013, respectively, Product development $180 and $166 for the three months ended September 30, 2014 and 2013, respectively and $529 and $526 for the nine months ended September 30, 2014 and 2013, respectively, and General and administrative $237 and $368 for the three months ended September 30, 2014 and 2013, respectively and $651 and $891 for the nine months ended September 30, 2014 and 2013, respectively.

[2] 3) Amounts include amortization expense as follows: Cost of revenue $1,732 and $1,445 for the three months ended March 31, 2015 and 2014, respectively.

[3] Amounts include stock compensation expense as follows: Cost of revenue $365 and $635 for the three months ended September 30, 2014 and 2013, respectively and $1209 and $1557 for the nine months ended September 30, 2014 and 2013, respectively, Sales and marketing $1030 and $844 for the three months ended September 30, 2014 and 2013, respectively and $2,766 and $2,159 for the nine months ended September 30, 2014 and 2013, respectively, Product development $1,171 and $1,241 for the three months ended September 30, 2014 and 2013, respectively and $2,783 and $2,922 for the nine months ended September 30, 2014 and 2013, respectively, and General and administrative $1,088 and $1,078 for the three months ended September 30, 2014 and 2013, respectively and $2,800 and $3,111 for the nine months ended September 30, 2014 and 2013, respectively.

XML

Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Payables and Accruals [Abstract]
Payroll and other employee related costs	$ 10,893	$ 15,373
Professional services and consulting and other vendor fees	9,730	9,258
Sales commissions	1,448	3,268
Contingent earnout (see Notes 8 and 9)	6,591	6,940
Other	2,869	2,933
Total	$ 31,531	$ 37,772

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
CURRENT ASSETS:
Cash and cash equivalents	$ 40,836	$ 49,372
Accounts receivable, net of allowance for doubtful accounts of $1,360 and $1,275 as of March 31, 2015 and December 31, 2014, respectively	35,588	31,382
Prepaid expenses and other current assets	12,919	10,374
Deferred tax assets, net	1,236	2,575
Total current assets	90,579	93,703
Property and equipment, net	20,973	19,583
Intangibles, net	30,629	32,620
Goodwill	80,310	80,848
Deferred tax assets, net	11,281	10,762
Other assets	2,316	2,301
Total assets	236,088	239,817
CURRENT LIABILITIES:
Accounts payable	12,568	8,985
Accrued expenses and other current liabilities	31,531	37,772
Deferred revenue	10,216	11,992
Total current liabilities	54,315	58,749
Other liabilities	724	731
Total liabilities	55,039	59,480
Commitments and contingencies (See Note 10)
STOCKHOLDERS’ EQUITY (See Note 11):
Common stock	58	57
Additional paid-in capital	277,801	274,046
Treasury stock	(1)	(1)
Accumulated deficit	(94,682)	(92,627)
Accumulated other comprehensive loss	(2,127)	(1,138)
Total stockholders’ equity	181,049	180,337
Total liabilities and stockholders’ equity	$ 236,088	$ 239,817

XML

Fair Value Measurements Level 3 Liabilities (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended	0 Months Ended
	Mar. 31, 2015	Dec. 31, 2014	Jun. 02, 2014	Nov. 07, 2014
Recurring [Member] | Level 3 [Member]
Business Combination, Contingent Consideration Arrangements, Change In Contingent Consideration Liability [Roll Forward]
Balance, Beginning of Period	$ 6,940	$ 1,660
Cash payment	(350)	(750)
Balance, End of Period	6,590	6,940
Synchronite, LLC [Member]
Business Combination, Contingent Consideration Arrangements, Change In Contingent Consideration Liability [Roll Forward]
Balance, End of Period			1,800
Synchronite, LLC [Member] | Recurring [Member] | Level 3 [Member]
Business Combination, Contingent Consideration Arrangements, Change In Contingent Consideration Liability [Roll Forward]
Synchronite addition	0	1,810
Contact At Once! [Member]
Business Combination, Contingent Consideration Arrangements, Change In Contingent Consideration Liability [Roll Forward]
Balance, Beginning of Period				4,200
Balance, End of Period				4,200
Contact At Once! [Member] | Recurring [Member] | Level 3 [Member]
Business Combination, Contingent Consideration Arrangements, Change In Contingent Consideration Liability [Roll Forward]
Synchronite addition	0	4,220
Contingent Earn-Out [Member] | Synchronite, LLC [Member] | Recurring [Member] | Level 3 [Member]
Business Combination, Contingent Consideration Arrangements, Change In Contingent Consideration Liability [Roll Forward]
Synchronite addition			1,800
Contingent Earn-Out [Member] | Contact At Once! [Member] | Recurring [Member] | Level 3 [Member]
Business Combination, Contingent Consideration Arrangements, Change In Contingent Consideration Liability [Roll Forward]
Synchronite addition				$ 4,200

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
OPERATING ACTIVITIES:
Net loss	$ (2,058)	$ (794)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	2,794	2,697
Depreciation	2,578	1,981
Amortization of purchased intangibles	2,152	1,058
Deferred income taxes and other non-cash tax items	820	(76)
Provision for doubtful accounts, net	403	271
Changes in operating assets and liabilities:
Accounts receivable	(4,609)	48
Prepaid expenses and other current assets	(2,544)	(3,930)
Other assets	(15)	460
Accounts payable	1,359	1,114
Accrued expenses and other current liabilities	(7,045)	(3,828)
Deferred revenue	(1,776)	(1,586)
Other liabilities	361	(414)
Net cash used in operating activities	(7,580)	(2,999)
INVESTING ACTIVITIES:
Purchases of property and equipment, including capitalized software	(1,783)	(1,456)
Investment in technology licenses	0	(3,174)
Payments for acquisitions and intangible assets, net of cash acquired	0	(125)
Net cash used in investing activities	(1,783)	(4,755)
FINANCING ACTIVITIES:
Excess tax benefit from the exercise of employee stock options	751	0
Proceeds from issuance of common stock in connection with the exercise of options	2,284	2,978
Repurchase of common stock	(2,058)	(7,841)
Net cash provided by (used in) financing activities	977	(4,863)
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(150)	84
CHANGE IN CASH AND CASH EQUIVALENTS	(8,536)	(12,533)
CASH AND CASH EQUIVALENTS - Beginning of the period	49,372	91,906
CASH AND CASH EQUIVALENTS - End of the period	40,836	79,373
SUPPLEMENTAL DISCLOSURE OF OTHER CASH FLOW INFORMATION:
Cash paid for income taxes	583	1,037
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Purchase of property and equipment recorded in accounts payable	2,224	1,174
Acquisition costs in connection with NexGraph recorded in accrued expenses	$ 0	$ 375

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Goodwill and Intangible Assets (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Aggregate amortization expense for intangible assets	$ 2,152	$ 1,058

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the three months endedMarch 31, 2015 are as follows (amounts in thousands):

	Business			Consumer		Total
Balance as of December 31, 2014	$	72,824		$	8,024	$	80,848
Adjustments to goodwill:
Foreign exchange adjustment	(538		)	—		(538		)
Balance as of March 31, 2015	$	72,286		$	8,024	$	80,310

The changes in the carrying amount of goodwill for the year ended December 31, 2014 are as follows (amounts in thousands):

	Business		Consumer		Total
Balance as of December 31, 2013	$	24,700	$	8,024	$	32,724
Adjustments to goodwill:
Acquisitions	48,124		—		48,124
Balance as of December 31, 2014	$	72,824	$	8,024	$	80,848

Summary of Intangible Assets

Intangible assets are summarized as follows (see Note 8) (amounts in thousands):

	As of March 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Amortization Period
Amortizing intangible assets:
Technology	$	28,005	$	(12,379	)	$	15,626	5.3 years
Customer relationships	16,008		(4,818		)	11,190		7.9 years
Trade names	1,287		(946		)	341		2.8 years
Non-compete agreements	1,446		(721		)	725		2.3 years
Patents	3,290		(584		)	2,706		9.9 years
Other	312		(271		)	41		3.0 years
Total	$	50,348	$	(19,719	)	$	30,629

	As of December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Amortization Period
Amortizing intangible assets:
Technology	$	27,844	$	(11,303	)	$	16,541	5.3 years
Customer relationships	16,008		(4,055		)	11,953		7.9 years
Trade names	1,287		(817		)	470		2.8 years
Non-compete agreements	1,446		(625		)	821		2.3 years
Patents	3,290		(500		)	2,790		9.9 years
Other	312		(267		)	45		3.0 years
Total	$	50,187	$	(17,567	)	$	32,620

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Estimated amortization expense for the next five years is as follows (amounts in thousands):  

	Estimated Amortization Expense
2015	$	5,828
2016	6,755
2017	4,934
2018	2,815
2019	2,809
Thereafter	7,488
Total	$	30,629

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Goodwill and Intangible Assets (Changes in Carrying Amount of Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended	3 Months Ended
	Dec. 31, 2014	Mar. 31, 2015	Dec. 31, 2013
Goodwill [Line Items]
Beginning Balance	$ 32,724
Goodwill Acquisitions	48,124
Ending Balance	80,848	80,310
Business [Member]
Goodwill [Line Items]
Beginning Balance	24,700
Goodwill Acquisitions	48,124
Ending Balance	72,824	72,286
Consumer [Member]
Goodwill [Line Items]
Beginning Balance			8,024
Ending Balance	8,024	8,024	8,024
Synchronite, LLC [Member]
Goodwill [Line Items]
Goodwill, Translation Adjustments		(538)
Ending Balance		2,700
Synchronite, LLC [Member] | Business [Member]
Goodwill [Line Items]
Goodwill, Translation Adjustments		$ (538)

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Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2015

Payables and Accruals [Abstract]

Accrued Liabilities

The following table presents the detail of accrued and other current liabilities for the periods presented (amounts in thousands):

	March 31, 2015		December 31, 2014
Payroll and other employee related costs	$	10,893	$	15,373
Professional services and consulting and other vendor fees	9,730		9,258
Sales commissions	1,448		3,268
Contingent earnout (see Notes 8 and 9)	6,591		6,940
Other	2,869		2,933
Total	$	31,531	$	37,772

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Description of Business and Basis of Presentation

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Description of Business and Basis of Presentation

Description of Business and Basis of Presentation

LivePerson, Inc. (the “Company” or “LivePerson”) was incorporated in the State of Delaware in November 1995 and the LivePerson service was introduced in November 1998. In April 2000, the Company completed an initial public offering and is currently traded on the Nasdaq Global Select Market and the Tel Aviv Stock Exchange. LivePerson is headquartered in New York City with offices in Amsterdam, Atlanta, Berlin, London, Mannheim, Melbourne, Milan, Ra'anana, Reading (UK), San Francisco and Tokyo.

LivePerson provides online engagement solutions offering a cloud-based platform which enables businesses to proactively connect with consumers through chat, voice and content delivery, across multiple channels and screens, including websites, social media, tablets and mobile devices. The Company’s engagements are driven by insights derived from a broad set of consumer and business data, including historical, behavioral, operational, and third party data. Each engagement is based on proprietary analytics and a real-time understanding of consumer needs and business objectives. The Company’s products, coupled with its domain knowledge and industry expertise, have been proven to maximize the effectiveness of the online channel — by increasing sales, as well as consumer satisfaction and loyalty ratings for its customers, while also enabling its customers to reduce consumer service costs.

LivePerson monitors and analyzes valuable online consumer behavioral data on behalf of its customers. Spanning the breadth of an online visitor session, starting from an initial keyword search through actions on their customer’s website, and even into a shopping cart and an executed sale, this data enables the Company to develop unique insights into consumer behavior during specific transactions within a customer’s user base.

The Company’s primary revenue source is from the sale of LivePerson services to businesses of all sizes. The Company also offers an online marketplace that connects independent service providers (“Experts”) who provide information and knowledge for a fee via real-time chat with individual consumers (“Users”).

Basis of Presentation

The accompanying condensed consolidated financial statements as of March 31, 2015 and for the three months ended March 31, 2015 and 2014 are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the consolidated financial position of LivePerson as of March 31, 2015, and the consolidated results of operations, comprehensive loss and cash flows for the interim periods ended March 31, 2015 and 2014. The financial data and other information disclosed in these notes to the condensed consolidated financial statements related to these periods are unaudited. The results of operations for any interim period are not necessarily indicative of the results of operations for any other future interim period or for a full fiscal year. The condensed consolidated balance sheet at December 31, 2014 has been derived from audited consolidated financial statements at that date.

Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2014, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2015.

Principles of Consolidation

The condensed consolidated financial statements include the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the condensed consolidated financial statements; therefore, actual results could differ from management’s estimates.

Recently Issued Accounting Standards

On February 18, 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”), which affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The standard amends the consolidation requirements in ASC 810. ASU 2015-02 is effective for fiscal periods beginning after December 15, 2015 for public companies, and early adoption is permitted. The Company does not expect to early adopt ASU 2015-02, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes most existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures).

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 1,360	$ 1,275

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Stockholders' Equity

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stockholders' Equity

Stockholders' Equity

Common Stock

As of March 31, 2015, there were 100,000,000 shares of common stock authorized, and 57,039,125 shares issued and outstanding. As of December 31, 2014, there were 100,000,000 shares of common stock authorized, and 56,701,331 shares issued and outstanding. The par value for common shares is $0.001.

Preferred Stock

As of March 31, 2015 and December 31, 2014, there were 5,000,000 shares of preferred stock authorized, and zero shares issued and outstanding. The par value for preferred shares is $0.001.

Stock Repurchase Program

On December 10, 2012, the Company’s Board of Directors approved a stock repurchase program through June 30, 2014. Under the stock repurchase program, the Company is authorized to repurchase shares of its common stock, in the open market or privately negotiated transactions, at times and prices considered appropriate by the Board of Directors depending upon prevailing market conditions and other corporate considerations. On March 13, 2014, the Company's Board of Directors increased the aggregate purchase price of the stock repurchase program from $30.0 million to $40.0 million. On July 23, 2014, the Company's Board of Directors increased the aggregate purchase price of the stock repurchase program from $40.0 million to $50.0 million. On March 5, 2015, the Company's Board of Directors extended the expiration date of the program out to December 31, 2016. There were 176,172 shares repurchased under this program during 2015, of which 33,360 shares were recorded in treasury stock at par on the condensed consolidated balance sheets as of March 31, 2015. As of March 31, 2015, approximately $8.2 million remained available for purchase under the program.

Stock-Based Compensation

The Company follows FASB ASC 718-10, “Stock Compensation,” which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.

The following table summarizes stock-based compensation expense related to employee stock options under ASC 718-10 included in Company’s statements of operations for the periods presented (amounts in thousands):

	Three Months Ended
	March 31,
	2015		2014
Cost of revenue	$	328	$	360
Sales and marketing expense	595		814
Product development expense	939		680
General and administrative expense	932		843
Total stock based compensation included in costs and expenses	$	2,794	$	2,697

The per share weighted average fair value of stock options granted during the three months ended March 31, 2015 and 2014 was $4.64 and $6.25, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Three Months Ended
	March 31,
	2015	2014
Dividend yield	0.0%	0.0%
Risk-free interest rate	1.3%	1.5%
Expected life (in years)	5	5
Historical volatility	49.7%	53.7%

A description of the methods used in the significant assumptions used to estimate the fair value of stock-based compensation awards follows:

Dividend yield – The Company uses 0% as it has never issued dividends and does not anticipate issuing dividends in the near term.

Risk-free interest rate – The Company uses the market yield on U.S. Treasury securities at five years with constant maturity, representing the current expected life of stock options in years.

Expected life – The Company uses historical data to estimate the expected life of a stock option.

Historical volatility – The Company uses a trailing five year from grant date to determine volatility.

Stock Option Plans

During 1998, the Company established the Stock Option and Restricted Stock Purchase Plan (the “1998 Plan”). Under the 1998 Plan, the Board of Directors could issue incentive stock options or nonqualified stock options to purchase up to 5,850,000 shares of common stock. The 2000 Stock Incentive Plan (the “2000 Plan”) succeeded the 1998 Plan. Under the 2000 Plan, the options which had been outstanding under the 1998 Plan were incorporated in the 2000 Plan increasing the number of shares available for issuance under the plan by approximately 4,150,000, thereby reserving for issuance 10,000,000 shares of common stock in the aggregate.

The Company established the 2009 Stock Incentive Plan (as amended and restated, the “2009 Plan”) as a successor to the 2000 Plan. Under the 2009 Plan, the options which had been outstanding under the 2000 Plan were incorporated into the 2009 Plan and the Company increased the number of shares available for issuance under the plan by 6,000,000. The Company amended the 2009 stock incentive plan (the “Amended 2009 Plan”) effective June 7, 2012. The Amended 2009 Plan increased the number of shares authorized for issuance under the plan by an additional 4,250,000, thereby reserving for issuance 23,817,744 shares of common stock in the aggregate. Options to acquire common stock granted thereunder have 10-year terms. As of March 31, 2015, approximately 13,100,000 shares of common stock were reserved for issuance under the 2009 Plan (taking into account all option exercises through March 31, 2015).

Employee Stock Purchase Plan

In June 2010, the Company’s stockholders approved the 2010 Employee Stock Purchase Plan with 1,000,000 shares of common stock initially reserved for issuance. As of March 31, 2015, approximately 519,000 shares of common stock were reserved for issuance under the Employee Stock Purchase Plan (taking into account all share purchases through March 31, 2015).

Stock Option Activity

A summary of the Company’s stock option activity and weighted average exercise prices follows:

	Stock Option Activity				Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
	Options		Weighted Average Exercise Price
Balance outstanding at December 31, 2014	10,769,149		$	10.95
Granted	434,550		10.53
Exercised	(430,533	)	4.03
Cancelled or expired	(620,425	)	12.38
Balance outstanding at March 31, 2015	10,152,741		$	11.13	7.31	$	9,027
Options vested and expected to vest at March 31, 2015	8,600,976		$	11.13	7.01	$	8,766
Options exercisable at March 31, 2015	4,354,151		$	10.50	5.68	$	7,900

The total fair value of stock options exercised during the three months endedMarch 31, 2015 was approximately $1.1 million. As of March 31, 2015, there was approximately $25.6 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of approximately 2.6 years.

A summary of the status of the Company’s nonvested shares as of December 31, 2014, and changes during the three months endedMarch 31, 2015 is as follows:

	Options		Weighted Average Grant- Date Fair Value
Nonvested Shares at December 31, 2014	6,032,315		$	5.66
Granted	434,550		4.64
Vested	(47,850	)	5.10
Cancelled or expired	(620,425	)	6.09
Nonvested Shares at March 31, 2015	5,798,590		$	5.59

The total intrinsic value of nonvested options at March 31, 2015 was approximately $1.1 million.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 05, 2015
Document - Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Trading Symbol	lpsn
Entity Registrant Name	LIVEPERSON INC
Entity Central Index Key	0001102993
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		57,051,150

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Legal Matters

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Legal Matters

Legal Matters

The Company routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where the Company assesses the likelihood of loss as probable.

From time to time, the Company is involved in or subject to legal, administrative and regulatory proceedings, claims, demands and investigations arising in the ordinary course of business, including direct claims brought by or against the Company with respect to intellectual property, contracts, employment and other matters, as well as claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In addition, in the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosures related to such matter as appropriate and in compliance with ASC 450. The accruals or estimates, if any, resulting from the foregoing analysis, are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, the Company will, as applicable, adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.

From time to time, third parties assert claims against the Company regarding intellectual property rights, privacy issues and other matters arising out of the ordinary course of business. Although the Company cannot be certain of the outcome of any litigation or the disposition of any claims, nor the amount of damages and exposure, if any, that the Company could incur, the Company currently believes that the final disposition of all existing matters will not have a material adverse effect on our business, results of operations, financial condition or cash flows. In addition, in the ordinary course of our business, the Company is also subject to periodic threats of lawsuits, investigations and claims. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Revenue	$ 59,770		$ 47,828
Costs and expenses (1) (2)
Cost of revenue (3)	16,254	[1],[2],[3]	11,735	[1],[2],[3]
Sales and marketing	24,294	[1],[3]	18,395	[1],[3]
General and administrative	10,164	[1],[3]	9,499	[1],[3]
Product development	9,800	[1],[3]	8,951	[1],[3]
Amortization of purchased intangibles	1,313		190
Total costs and expenses	61,825		48,770
Loss from operations	(2,055)		(942)
Other expense	(231)		(83)
Loss before benefit from income taxes	(2,286)		(1,025)
Benefit from income taxes	(228)		(231)
Net loss	(2,058)		(794)
Basic net (loss) income per common share (in dollars per share)	$ (0.04)		$ (0.01)
Diluted net (loss) income per common share (in dollars per share)	$ (0.04)		$ (0.01)
Weighted average shares outstanding used in basic net (loss) income per common share calculation (in shares)	56,291,383		54,666,535
Weighted average shares outstanding used in diluted net (loss) income per common share calculation (in shares)	56,291,383		54,666,535
Stock compensation expense	2,794		2,697
Cost of revenue [Member]
Costs and expenses (1) (2)
Amortization of purchased intangibles	839		868
Stock compensation expense	328		360
Depreciation expense	1,903		1,397
Sales and marketing expense [Member]
Costs and expenses (1) (2)
Stock compensation expense	595		814
Depreciation expense	250		207
Product development expense [Member]
Costs and expenses (1) (2)
Stock compensation expense	939		680
Depreciation expense	188		177
General and administrative expense [Member]
Costs and expenses (1) (2)
Stock compensation expense	932		843
Depreciation expense	$ 237		$ 200

[1] Amounts include depreciation expense as follows: Cost of revenue $1,732 and $1,445 for the three months ended September 30, 2014 and 2013, respectively and $4,776 and $4,565 for the nine months ended September 30, 2014 and 2013, respectively, Sales and marketing $195 and $23 for the three months ended September 30, 2014 and 2013, respectively and $603 and $68 for the nine months ended September 30, 2014 and 2013, respectively, Product development $180 and $166 for the three months ended September 30, 2014 and 2013, respectively and $529 and $526 for the nine months ended September 30, 2014 and 2013, respectively, and General and administrative $237 and $368 for the three months ended September 30, 2014 and 2013, respectively and $651 and $891 for the nine months ended September 30, 2014 and 2013, respectively.

[2] 3) Amounts include amortization expense as follows: Cost of revenue $1,732 and $1,445 for the three months ended March 31, 2015 and 2014, respectively.

[3] Amounts include stock compensation expense as follows: Cost of revenue $365 and $635 for the three months ended September 30, 2014 and 2013, respectively and $1209 and $1557 for the nine months ended September 30, 2014 and 2013, respectively, Sales and marketing $1030 and $844 for the three months ended September 30, 2014 and 2013, respectively and $2,766 and $2,159 for the nine months ended September 30, 2014 and 2013, respectively, Product development $1,171 and $1,241 for the three months ended September 30, 2014 and 2013, respectively and $2,783 and $2,922 for the nine months ended September 30, 2014 and 2013, respectively, and General and administrative $1,088 and $1,078 for the three months ended September 30, 2014 and 2013, respectively and $2,800 and $3,111 for the nine months ended September 30, 2014 and 2013, respectively.

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Property and Equipment

3 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

The following table presents the detail of property and equipment for the periods presented (amounts in thousands):

	March 31, 2015			December 31, 2014
Computer equipment and software	$	59,122		$	55,293
Furniture, equipment and building improvements	9,578			9,439
	68,700			64,732
Less: accumulated depreciation	(47,727		)	(45,149		)
Total	$	20,973		$	19,583

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Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the three months endedMarch 31, 2015 are as follows (amounts in thousands):

	Business			Consumer		Total
Balance as of December 31, 2014	$	72,824		$	8,024	$	80,848
Adjustments to goodwill:
Foreign exchange adjustment	(538		)	—		(538		)
Balance as of March 31, 2015	$	72,286		$	8,024	$	80,310

The changes in the carrying amount of goodwill for the year ended December 31, 2014 are as follows (amounts in thousands):

	Business		Consumer		Total
Balance as of December 31, 2013	$	24,700	$	8,024	$	32,724
Adjustments to goodwill:
Acquisitions	48,124		—		48,124
Balance as of December 31, 2014	$	72,824	$	8,024	$	80,848

Intangible Assets

Intangible assets are summarized as follows (see Note 8) (amounts in thousands):

	As of March 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Amortization Period
Amortizing intangible assets:
Technology	$	28,005	$	(12,379	)	$	15,626	5.3 years
Customer relationships	16,008		(4,818		)	11,190		7.9 years
Trade names	1,287		(946		)	341		2.8 years
Non-compete agreements	1,446		(721		)	725		2.3 years
Patents	3,290		(584		)	2,706		9.9 years
Other	312		(271		)	41		3.0 years
Total	$	50,348	$	(19,719	)	$	30,629

	As of December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Amortization Period
Amortizing intangible assets:
Technology	$	27,844	$	(11,303	)	$	16,541	5.3 years
Customer relationships	16,008		(4,055		)	11,953		7.9 years
Trade names	1,287		(817		)	470		2.8 years
Non-compete agreements	1,446		(625		)	821		2.3 years
Patents	3,290		(500		)	2,790		9.9 years
Other	312		(267		)	45		3.0 years
Total	$	50,187	$	(17,567	)	$	32,620

Amortization expense is calculated over the estimated useful life of the asset. Aggregate amortization expense for intangible assets was $2.2 million and $1.1 million for the three months ended March 31, 2015 and 2014, respectively. For the three months ended March 31, 2015 and 2014, respectively, a portion of this amortization is included in cost of revenue. Estimated amortization expense for the next five years is as follows (amounts in thousands):  

	Estimated Amortization Expense
2015	$	5,828
2016	6,755
2017	4,934
2018	2,815
2019	2,809
Thereafter	7,488
Total	$	30,629

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Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Summary of Property and Equipment

The following table presents the detail of property and equipment for the periods presented (amounts in thousands):

	March 31, 2015			December 31, 2014
Computer equipment and software	$	59,122		$	55,293
Furniture, equipment and building improvements	9,578			9,439
	68,700			64,732
Less: accumulated depreciation	(47,727		)	(45,149		)
Total	$	20,973		$	19,583

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Description of Business and Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

SUMMARY OF OPERATIONS

LivePerson, Inc. (the “Company” or “LivePerson”) was incorporated in the State of Delaware in November 1995 and the LivePerson service was introduced in November 1998. In April 2000, the Company completed an initial public offering and is currently traded on the Nasdaq Global Select Market and the Tel Aviv Stock Exchange. LivePerson is headquartered in New York City with offices in Amsterdam, Atlanta, Berlin, London, Mannheim, Melbourne, Milan, Ra'anana, Reading (UK), San Francisco and Tokyo.

LivePerson provides online engagement solutions offering a cloud-based platform which enables businesses to proactively connect with consumers through chat, voice and content delivery, across multiple channels and screens, including websites, social media, tablets and mobile devices. The Company’s engagements are driven by insights derived from a broad set of consumer and business data, including historical, behavioral, operational, and third party data. Each engagement is based on proprietary analytics and a real-time understanding of consumer needs and business objectives. The Company’s products, coupled with its domain knowledge and industry expertise, have been proven to maximize the effectiveness of the online channel — by increasing sales, as well as consumer satisfaction and loyalty ratings for its customers, while also enabling its customers to reduce consumer service costs.

LivePerson monitors and analyzes valuable online consumer behavioral data on behalf of its customers. Spanning the breadth of an online visitor session, starting from an initial keyword search through actions on their customer’s website, and even into a shopping cart and an executed sale, this data enables the Company to develop unique insights into consumer behavior during specific transactions within a customer’s user base.

The Company’s primary revenue source is from the sale of LivePerson services to businesses of all sizes. The Company also offers an online marketplace that connects independent service providers (“Experts”) who provide information and knowledge for a fee via real-time chat with individual consumers (“Users”).

BASIS OF PRESENTATION

Basis of Presentation

The accompanying condensed consolidated financial statements as of March 31, 2015 and for the three months ended March 31, 2015 and 2014 are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the consolidated financial position of LivePerson as of March 31, 2015, and the consolidated results of operations, comprehensive loss and cash flows for the interim periods ended March 31, 2015 and 2014. The financial data and other information disclosed in these notes to the condensed consolidated financial statements related to these periods are unaudited. The results of operations for any interim period are not necessarily indicative of the results of operations for any other future interim period or for a full fiscal year. The condensed consolidated balance sheet at December 31, 2014 has been derived from audited consolidated financial statements at that date.

Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2014, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2015.

REVENUE RECOGNITION

Revenue Recognition 

The majority of the Company’s revenue is generated from monthly service revenues and related professional services from the sale of the LivePerson services. Because the Company provides its application as a service, the Company follows the provisions of FASB Accounting Standards Codification (“ASC”) 605-10-S99, “Revenue Recognition” and ASC 605-25, “Revenue Recognition with Multiple-Element Arrangements.” The Company charges a monthly fee, which varies by type of service, the level of customer usage and website traffic, and in some cases, the number of orders placed via the Company’s online engagement solutions.

For certain of the Company’s larger customers, the Company may provide call center labor through an arrangement with one or more of several qualified vendors. For most of these customers, the Company passes the fee it incurs with the labor provider and its fee for the hosted services through to its customers in the form of a fixed fee for each order placed via the Company’s online engagement solutions. For these Pay for Performance (“PFP”) arrangements, in accordance with ASC 605-45, “Principal Agent Considerations,” the Company records revenue for transactions in which it acts as an agent on a net basis, and revenue for transactions in which it acts as a principal on a gross basis.

The Company also sells certain of the LivePerson services directly via Internet download.  These services are marketed as LiveEngage for small to medium-sized businesses, and are paid for almost exclusively by credit card.  Credit card payments accelerate cash flow and reduce the Company’s collection risk, subject to the merchant bank's right to hold back cash pending settlement of the transactions.  Sales of LiveEngage may occur with or without the assistance of an online sales representative, rather than through face-to-face or telephone contact that is typically required for traditional direct sales.

The Company recognizes monthly service revenue based upon the fee charged for the LivePerson services, provided that there is persuasive evidence of an arrangement, no significant Company obligations remain, collection of the resulting receivable is probable and the amount of fees to be paid is fixed or determinable. The Company’s service agreements typically have twelve month terms and, in some cases, are terminable or may terminate upon 30 to 90 days’ notice without penalty. When professional service fees add value to the customer on a standalone basis, the Company recognizes professional service fees upon completion and customer acceptance. ASU 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) best estimated selling price. If a professional services arrangement does not qualify for separate accounting, the Company recognizes the fees, and the related labor costs, ratably over the contracted period.

For revenue from the Company's Consumer segment generated from online transactions between Experts and Users, the Company recognizes revenue net of the Expert fees in accordance with ASC 605-45, “Principal Agent Considerations,” due primarily to the fact that the Expert is the primary obligor. Additionally, the Company performs as an agent without any risk of loss for collection, and is not involved in selecting the Expert or establishing the Expert’s fee. The Company collects a fee from the User and retains a portion of the fee, and then remits the balance to the Expert. Revenue from these transactions is recognized when there is persuasive evidence of an arrangement, no significant Company obligations remain, collection of the resulting receivable is probable and the amount of fees to be paid is fixed and determinable.

NET LOSS PER SHARE

Net Loss Per Share

The Company calculates earnings per share (“EPS”) in accordance with the provisions of ASC 260-10 and the guidance of SEC Staff Accounting Bulletin (“SAB”) No. 98. Under ASC 260-10, basic EPS excludes dilution for common stock equivalents and is computed by dividing net income or loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. All options, warrants or other potentially dilutive instruments issued for nominal consideration are required to be included in the calculation of basic and diluted net income attributable to common stockholders. Diluted EPS is calculated using the treasury stock method and reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and resulted in the issuance of common stock.

Diluted net loss per common share for the three months ended March 31, 2015 and 2014 does not include the effect of options to purchase 10,152,741 and 9,678,582 shares of common stock, respectively, as the effect of their inclusion is anti-dilutive.

A reconciliation of shares used in calculating basic and diluted earnings per share follows:

	Three Months Ended
	March 31,
	2015	2014
Basic	56,291,383	54,666,535
Effect of assumed exercised options	—	—
Diluted	56,291,383	54,666,535

SEGMENT REPORTING

Segment Information

The Company accounts for its segment information in accordance with the provisions of ASC 280-10, “Segment Reporting.” ASC 280-10 establishes annual and interim reporting standards for operating segments of a company. ASC 280-10 requires disclosures of selected segment-related financial information about products, major customers, and geographic areas based on the Company’s internal accounting methods. The Company is organized into two operating segments for purposes of making operating decisions and assessing performance. The Business segment facilitates real-time online interactions – chat, voice and content delivery across multiple channels and screens for global corporations of all sizes. The Consumer segment facilitates online transactions between Experts and Users and sells its services to consumers. Both segments currently generate their revenue primarily in the United States. The chief operating decision maker, who is the chief executive officer, evaluates performance, makes operating decisions, and allocates resources based on the operating income of each segment. The reporting segments follow the same accounting polices used in the preparation of the Company’s condensed consolidated financial statements which are described in the summary of significant accounting policies. The Company allocates cost of revenue, sales and marketing and amortization of purchased intangibles to the segments, but it does not allocate product development expenses, general and administrative expenses and income tax expense because management does not use this information to measure performance of the operating segments.

GOODWILL AND INTANGIBLE ASSETS

Amortization expense is calculated over the estimated useful life of the asset.

STOCK-BASED COMPENSATION

Stock-Based Compensation

The Company follows FASB ASC 718-10, “Stock Compensation,” which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company measures its cash equivalents at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value:

• Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2: Inputs reflect: quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

• Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

Financial Assets and Liabilities

The Company's assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy as of March 31, 2015 and December 31, 2014, are summarized as follows (amounts in thousands):

	March 31, 2015								December 31, 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	3,088	$	—	$	—	$	3,088	$	3,987	$	—	$	—	$	3,987
Total assets	$	3,088	$	—	$	—	$	3,088	$	3,987	$	—	$	—	$	3,987
Liabilities:
Contingent earn-out	$	—	$	—	$	6,590	$	6,590	$	—	$	—	$	6,940	$	6,940
Foreign currency derivative contracts	—		423		—		423		—		—		—		—
Total liabilities	$	—	$	423	$	6,590	$	7,013	$	—	$	—	$	6,940	$	6,940

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's assumptions based on the best information available.

The Company's only asset that is measured at fair value on a recurring basis is money market funds, based on quoted market prices in active markets and therefore classified as level 1 within the fair value hierarchy. The Company's contingent earn-out liability and foreign currency derivative contract liability are measured at fair value on a recurring basis and are classified as level 3 and level 2, respectively, within the fair value hierarchy. On a nonrecurring basis, the Company uses fair value measures when analyzing asset impairment. Long-lived tangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present and the review indicates that the assets will not be fully recoverable, based on undiscounted estimated cash flows over the remaining amortization periods, their carrying values are reduced to estimated fair value. The Company uses an income approach and inputs that constitute level 3.  During the third quarter of each year, the Company evaluates goodwill for impairment at the reporting unit level. The Company uses a combination of discounted cash flows and other qualitative factors in accordance with ASU No. 2011-08 to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test.  This measurement is classified based on level 3 input.

The contingent earn-out in connection with the acquisition of Engage is $0.7 million and $0.9 million as of March 31, 2015 and December 31, 2014, respectively, and is recorded in accrued expenses in the condensed consolidated balance sheets. This earn-out is based on the potential earn-out consideration if certain revenue targets are achieved. The contingent earn-out balance was increased by $1.8 million in June 2014 in connection with the acquisition of Synchronite and $4.2 million in November 2014 in connection with the acquisition of CAO!. The contingent earn-out amounts are recorded in accrued expense on the condensed consolidated balance sheets as they are payable in 2015. The contingent earn-out relating to Synchronite is based on the fulfillment of a complete product integration and a minimum number of “Co-Browse” interactions per month. The contingent earn-out relating to CAO! is based on achieving certain target financial, strategic and integration objectives and milestones.

The changes in fair value of the Level 3 liabilities are as follows (amounts in thousands):

	Contingent Earn-Out
	March 31, 2015			December 31, 2014
Balance, Beginning of Period	$	6,940		$	1,660
Synchronite addition (see Note 8)	—			1,810
CAO! addition (see Note 8)	—			4,220
Cash payment	(350		)	(750		)
Balance, End of Period	$	6,590		$	6,940

Derivative Financial Instruments

The Company is exposed to foreign exchange risks that in part are managed by using derivative financial instruments. Beginning January 2015, the Company entered into foreign currency forward contracts related to risks associated with foreign operations. The Company does not use derivatives for trading purposes and at March 31, 2015 has no derivatives that are designated as fair value hedges. Derivatives are recorded at their estimated fair values based upon Level 2 inputs. Derivatives designated and effective as cash flow hedges are reported as a component of other comprehensive income and reclassified to earnings in the same periods in which the hedged transactions impact earnings. Gains and losses related to derivatives not meeting the requirements of hedge accounting and the portion of derivatives related to hedge ineffectiveness are recognized in current earnings.

The following summarizes certain information regarding the Company’s outstanding foreign currency derivative contracts related primarily to intercompany receivables and payables for the periods presented (in thousands):

	March 31, 2015		March 31, 2014
Notional amount of foreign currency derivative contracts	$	38,236	$	—
Fair value of foreign currency derivatives contracts	$	423	$	—

The fair value of the Company's derivative instruments are summarized below (in thousands):

		Fair Value of Derivative Instruments
	Balance Sheet Location	March 31, 2015		March 31, 2014
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivatives contracts	Accrued expenses and other liabilities	$	423	$	—

The following summarizes certain information regarding the Company’s derivatives that are not designated or are not effective as hedges (in thousands):

	Gain (losses) on Derivative Instruments Recognized in Income Statement
	Location	March 31, 2015		March 31, 2014
Foreign currency derivatives contracts	Other expense	$	7	$	—

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Accrued Liabilities

3 Months Ended

Mar. 31, 2015

Payables and Accruals [Abstract]

Accrued Liabilities

Accrued and Other Current Liabilities

The following table presents the detail of accrued and other current liabilities for the periods presented (amounts in thousands):

	March 31, 2015		December 31, 2014
Payroll and other employee related costs	$	10,893	$	15,373
Professional services and consulting and other vendor fees	9,730		9,258
Sales commissions	1,448		3,268
Contingent earnout (see Notes 8 and 9)	6,591		6,940
Other	2,869		2,933
Total	$	31,531	$	37,772

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Acquisitions

3 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

Acquisitions

Acquisitions

Engage Pty Ltd.

On November 9, 2012, the Company acquired all of the outstanding shares of Engage Pty Ltd. (“Engage”), an Australian provider of cloud-based customer contact solutions. The transaction was accounted for under the purchase method of accounting and, accordingly, the operating results of Engage were included in the Company’s consolidated results of operations from the date of acquisition.

The purchase price was approximately $10.6 million. The total acquisition costs incurred in the year ended December 31, 2012 were approximately $0.5 million and are included in general and administrative expenses in the Company’s condensed consolidated statements of operations for the same period. The acquisition enhances the Company’s ability to offer intelligent engagement solutions to businesses in the Asia Pacific region. Of the total purchase price, $0.8 million was allocated to the net book values of the acquired assets and assumed liabilities. The historical carrying amounts of such assets and liabilities approximated their fair values. All receivables acquired are expected to be collectible. The purchase price in excess of the fair value of the net book values of the assets acquired and liabilities assumed was allocated to intangible assets based on management’s best estimate of fair values, taking into account all relevant information available at the time of acquisition, and the excess was allocated to goodwill. The goodwill is not deductible for tax purposes. The intangible assets are being amortized over their expected period of benefit. The purchase price includes approximately $1.7 million of potential earn-out consideration for the shareholders if certain revenue targets are achieved. The earn-out is payable in shares of LivePerson common stock and cash. The Company recorded the contingent earn-out as part of the purchase price. In accordance with ASC 480, the Company has classified this amount as a liability and the amount is included in accrued expenses in the March 31, 2015 condensed consolidated balance sheets, due to the variable number of shares that will be issued if and when the targets are achieved. The Company assessed this earn-out at March 31, 2015 with no change from the original estimate. There was a decrease in the liability during the quarter ended March 31, 2015 as a result of a payment made of $0.3 million. The Company will assess the earn-out calculation in future periods and any future adjustments will affect operating income.

NexGraph, LLC

On March 11, 2014, the Company acquired all the outstanding shares of NexGraph, LLC (“NexGraph”), a company focused on analytic solutions, in exchange for aggregate cash consideration of $0.5 million. Of the purchase price, $0.1 million was allocated to Intangibles, net, of which was fully amortized as of March 31, 2015; and $0.4 million of the purchase price was allocated to Goodwill.

Synchronite, LLC

On June 2, 2014, the Company acquired Synchronite, LLC (“Synchronite”), a German-based start-up that provides co-browsing technology. The transaction was accounted for under the purchase method of accounting and, accordingly, the operating results of Synchronite were included in the Company’s consolidated results of operations from the date of acquisition.

The allocation of the total purchase price of approximately $4.1 million was based upon the estimated fair value of Synchronite's net tangible and identifiable intangible assets as of the date of acquisition. The total acquisition costs incurred were approximately $0.4 million and are included in general and administrative expenses in the Company’s condensed consolidated statements of operations. Of the total purchase price, $45,000 was allocated to the net book values of the acquired assets and assumed liabilities. The historical carrying amounts of such assets and liabilities approximated their fair values. All receivables acquired are expected to be collectible. The purchase price includes approximately $2.7 million of goodwill and approximately $1.5 million of intangible assets. The goodwill will be deductible for tax purposes. The intangible assets are being amortized over their expected period of benefit. The purchase price includes $1.8 million of potential earn-out consideration for the shareholders if complete product integration is achieved. The earn-out is payable in shares of LivePerson common stock and cash. The Company recorded the contingent earn-out as part of the purchase price. In accordance with ASC 480, the Company has classified this amount as a liability and the amount is included in accrued expenses in the March 31, 2015 condensed consolidated balance sheet, due to the variable number of shares that will be issued if and when the targets are achieved. The Company has assessed the earn-out calculation at March 31, 2015, with no change from the original estimate, and will assess the earn-out calculation in future periods and any future adjustments will affect operating income.

The components of the intangible assets are as follows (amounts in thousands): 

	Weighted Average Useful Life (Months)	Amount
Technology	120	$	1,082
Trade-name	48	62
Customer relationships	84	247
Non-compete agreements	36	60
		$	1,451

Contact At Once!, LLC

On November 7, 2014, the Company acquired Contact At Once!, LLC (“CAO!”), a software company with a cloud-based platform that instantly connects consumers with businesses through instant messaging, text messaging, chat, social media and video over the internet for consumer-to-business sales conversions. The transaction was accounted for under the purchase method of accounting and, accordingly, the operating results of CAO! were included in the Company’s consolidated results of operations from the date of acquisition. The Company is in the process of finalizing all fair value and purchase accounting adjustments.

The allocation of the total purchase price of approximately $67.0 million, which includes approximately $42.8 million in cash, approximately $20.0 million in shares of common stock and approximately $4.2 million of potential earn-out consideration in cash, was based upon the estimated fair value of CAO!'s net tangible and identifiable intangible assets as of the date of acquisition. The historical carrying amounts of such assets and liabilities approximated their fair values. All receivables acquired are expected to be collectible. The purchase price includes approximately $45.1 million of goodwill and approximately $20.4 million of intangible assets. The goodwill will be deductible for tax purposes. The intangible assets are being amortized over their expected period of benefit. The purchase price includes $4.2 million of potential earn-out consideration for the shareholders if certain targeted financial, strategic and integration objectives is achieved. The earn-out is payable in cash. The Company recorded the contingent earn-out as part of the purchase price. In accordance with ASC 480, the Company has classified this amount as a liability and is included in accrued expenses in the December 31, 2014 consolidated balance sheet. The Company has assessed this earn-out at March 31, 2015, with no change from the original estimate, and will assess the earn-out calculation in future periods and any future adjustments will affect operating income.

Management’s preliminary allocation of the purchase price in connection with the CAO! acquisition is as follows (amounts in thousands):

Cash	$	480
Accounts receivable	2,694
Other currents assets	289
Property and equipment	231
Other assets	43
Intangible assets	20,400
Goodwill	45,064
	69,201
Liabilities assumed	(2,203		)
Total purchase price consideration	$	66,998

The components of the intangible assets are as follows (amounts in thousands):

	Weighted Average Useful Life (Months)	Amount
Technology	96	$	8,400
Trade-name	12	500
Customer relationships	120	10,700
Non-compete agreements	36	800
		$	20,400

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Contractual Obligations

The Company leases facilities and certain equipment under agreements accounted for as operating leases. These leases generally require the Company to pay all executory costs such as maintenance and insurance. Rental expense for operating leases for the three months endedMarch 31, 2015 and 2014 was approximately $2.5 million and $2.2 million, respectively.

Employee Benefit Plans

The Company has a 401(k) defined contribution plan covering all eligible employees. The Company provides for employer matching contributions equal to 50% of employee contributions, up to the lesser of 5% of eligible compensation or $6,000. Matching contributions are deposited into the employee’s 401(k) account and are subject to 5 year graded vesting. Salaries and related expenses include $0.4 million and $0.3 million of employer matching contributions for the three months endedMarch 31, 2015 and 2014, respectively.

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Segment Information (Long-Lived Assets by Geographic Region) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Total long-lived assets	$ 145,509	$ 146,114
United States [Member]
Segment Reporting Information [Line Items]
Total long-lived assets	109,517	109,006
Israel [Member]
Segment Reporting Information [Line Items]
Total long-lived assets	18,173	18,982
Australia [Member]
Segment Reporting Information [Line Items]
Total long-lived assets	8,132	8,500
Netherlands [Member]
Segment Reporting Information [Line Items]
Total long-lived assets	7,709	7,686
United Kingdom [Member]
Segment Reporting Information [Line Items]
Total long-lived assets	$ 1,978	$ 1,940

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Stockholders' Equity (Summary of Stock Option Activity and Weighted Average Exercise Prices) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Options
Options outstanding at December 31, 2014	10,769,149
Options granted	434,550
Options exercised	(430,533)
Options cancelled	(620,425)
Options outstanding at March 31, 2015	10,152,741
Options vested and expected to vest at March 31, 2015	8,600,976
Options exercisable at March 31, 2015	4,354,151
Weighted Average Exercise Price
Options outstanding at December 31, 2013	$ 10.95
Options granted	$ 10.53
Options exercised	$ 4.03
Options cancelled	$ 12.38
Options outstanding at March 31, 2015	$ 11.13
Options vested and expected to vest at March 31, 2015	$ 11.13
Options exercisable at March 31, 2015	$ 10.50
Weighted Average Remaining Contractual Term (in years)
Options outstanding at March 31, 2015	7 years 3 months 22 days
Options vested and expected to vest at March 31, 2015	7 years 0 months 4 days
Options exercisable at March 31, 2015	5 years 8 months 5 days
Aggregate Intrinsic Value
Options outstanding at March 31, 2015	$ 9,027
Options vested and expected to vest at March 31, 2015	8,766
Options exercisable at March 31, 2015	$ 7,900

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Summary of Financial Information by Segment

Summarized financial information by segment for the three months ended March 31, 2015, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision maker, follows (amounts in thousands):

	Business		Consumer		Corporate			Consolidated
Revenue:
Hosted services – Business	$	50,613	$	—	$	—		$	50,613
Hosted services – Consumer	—		3,696		—			3,696
Professional services	5,461		—		—			5,461
Total revenue	56,074		3,696		—			59,770
Cost of revenue	15,617		637		—			16,254
Sales and marketing	22,852		1,442		—			24,294
Amortization of purchased intangibles	1,313		—		—			1,313
Unallocated corporate expenses	—		—		19,964			19,964
Operating income (loss)	$	16,292	$	1,617	$	(19,964	)	$	(2,055	)

Summarized financial information by segment for the three months ended March 31, 2014, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision maker, follows (amounts in thousands):

	Business		Consumer		Corporate			Consolidated
Revenue:
Hosted services – Business	$	39,680	$	—	$	—		$	39,680
Hosted services – Consumer	—		3,910		—			3,910
Professional services	4,238		—		—			4,238
Total revenue	43,918		3,910		—			47,828
Cost of revenue	11,220		515		—			11,735
Sales and marketing	16,918		1,477		—			18,395
Amortization of purchased intangibles	190		—		—			190
Unallocated corporate expenses	—		—		18,450			18,450
Operating income (loss)	$	15,590	$	1,918	$	(18,450	)	$	(942	)

Revenues Attributable to Domestic and Foreign Operations

The following table presents the Company’s revenues attributable to domestic and foreign operations for the periods presented (amounts in thousands):

	Three Months Ended
	March 31,
	2015		2014
United States	$	41,442	$	31,098
Other Americas (1)	2,703		2,150
Total Americas	44,145		33,248
EMEA (2)	11,784		10,515
APAC (3)	3,841		4,065
Total revenue	$	59,770	$	47,828

⁽¹⁾ Canada, Latin America and South America

⁽²⁾ Europe, the Middle East and Africa (“EMEA”)

⁽³⁾ Asia-Pacific (“APAC”)

Long-Lived Assets by Geographic Region

The following table presents the Company's long-lived assets by geographic region for the periods presented (amounts in thousands):

	March 31,		December 31,
	2015		2014
United States	$	109,517	$	109,006
Israel	18,173		18,982
Australia	8,132		8,500
Netherlands	7,709		7,686
Other (1)	1,978		1,940
Total long-lived assets	$	145,509	$	146,114

Long Lived Assets By Geography [Table Text Block]

The following table presents the Company's long-lived assets by geographic region for the periods presented (amounts in thousands):

	March 31,		December 31,
	2015		2014
United States	$	109,517	$	109,006
Israel	18,173		18,982
Australia	8,132		8,500
Netherlands	7,709		7,686
Other (1)	1,978		1,940
Total long-lived assets	$	145,509	$	146,114

⁽¹⁾ United Kingdom, Germany, Japan and Italy

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis

The Company's assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy as of March 31, 2015 and December 31, 2014, are summarized as follows (amounts in thousands):

	March 31, 2015								December 31, 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	3,088	$	—	$	—	$	3,088	$	3,987	$	—	$	—	$	3,987
Total assets	$	3,088	$	—	$	—	$	3,088	$	3,987	$	—	$	—	$	3,987
Liabilities:
Contingent earn-out	$	—	$	—	$	6,590	$	6,590	$	—	$	—	$	6,940	$	6,940
Foreign currency derivative contracts	—		423		—		423		—		—		—		—
Total liabilities	$	—	$	423	$	6,590	$	7,013	$	—	$	—	$	6,940	$	6,940

Change in Fair Value of Level 3 Liabilities

The changes in fair value of the Level 3 liabilities are as follows (amounts in thousands):

	Contingent Earn-Out
	March 31, 2015			December 31, 2014
Balance, Beginning of Period	$	6,940		$	1,660
Synchronite addition (see Note 8)	—			1,810
CAO! addition (see Note 8)	—			4,220
Cash payment	(350		)	(750		)
Balance, End of Period	$	6,590		$	6,940

Schedule of Derivative Instruments

The following summarizes certain information regarding the Company’s outstanding foreign currency derivative contracts related primarily to intercompany receivables and payables for the periods presented (in thousands):

	March 31, 2015		March 31, 2014
Notional amount of foreign currency derivative contracts	$	38,236	$	—
Fair value of foreign currency derivatives contracts	$	423	$	—

Schedule of Derivative Liabilities at Fair Value

The fair value of the Company's derivative instruments are summarized below (in thousands):

		Fair Value of Derivative Instruments
	Balance Sheet Location	March 31, 2015		March 31, 2014
Derivative Liabilities
Derivatives not designated as hedging instruments:
Foreign currency derivatives contracts	Accrued expenses and other liabilities	$	423	$	—

Gain (Losses) on Derivative Instruments Recognized in Income Statement

The following summarizes certain information regarding the Company’s derivatives that are not designated or are not effective as hedges (in thousands):

	Gain (losses) on Derivative Instruments Recognized in Income Statement
	Location	March 31, 2015		March 31, 2014
Foreign currency derivatives contracts	Other expense	$	7	$	—

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Stockholders' Equity (Summary of Stock-Based Compensation Expense Related to Employee Stock Options) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 2,794	$ 2,697
Cost of revenue [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	328	360
Sales and marketing expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	595	814
Product development expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	939	680
General and administrative expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 932	$ 843

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Acquisitions (Narrative) (Details) (USD $)	0 Months Ended	12 Months Ended	1 Months Ended	0 Months Ended	3 Months Ended	0 Months Ended
	Nov. 09, 2012	Dec. 31, 2013	Mar. 31, 2014	Jun. 02, 2014	Mar. 31, 2015	Nov. 07, 2014	Nov. 08, 2014	Dec. 31, 2014
Business Acquisition [Line Items]
Goodwill		$ 32,724,000			$ 80,310,000			$ 80,848,000
Engage Pty Ltd. [Member]
Business Acquisition [Line Items]
Business acquisition, acquisition date	Nov. 09, 2012
Acquisition costs incurred to acquire entity		500,000
Assets acquired liabilities assumed, net	800,000
Potential earn-out consideration	1,700,000				300,000
Engage [Member]
Business Acquisition [Line Items]
Total consideration transferred	10,600,000
NexGraph, LLC [Member]
Business Acquisition [Line Items]
Business acquisition, acquisition date			Mar. 11, 2014
Acquired Intangible Assets Amount			500,000
Intangible assets			100,000
Goodwill			400,000
Synchronite, LLC [Member]
Business Acquisition [Line Items]
Business acquisition, acquisition date				Jun. 02, 2014
Total consideration transferred				4,100,000
Acquisition costs incurred to acquire entity					400,000
Assets acquired liabilities assumed, net				45,000
Potential earn-out consideration				1,800,000
Intangible assets				1,451,000	1,450,000
Goodwill					2,700,000
Contact At Once! [Member]
Business Acquisition [Line Items]
Business acquisition, acquisition date						Nov. 07, 2014
Total consideration transferred							67,000,000
Acquired intangible asset, aggregate cash consideration						66,998,000
Potential earn-out consideration						4,200,000
Intangible assets						20,400,000
Goodwill						45,064,000
Cash payment						42,800,000
Consideration transferred, shares						$ 20,000,000

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
Net loss	$ (2,058)	$ (794)
Foreign currency translation adjustment	(989)	140
Comprehensive loss	$ (3,047)	$ (654)

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Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company accounts for its segment information in accordance with the provisions of ASC 280-10, “Segment Reporting.” ASC 280-10 establishes annual and interim reporting standards for operating segments of a company. ASC 280-10 requires disclosures of selected segment-related financial information about products, major customers, and geographic areas based on the Company’s internal accounting methods. The Company is organized into two operating segments for purposes of making operating decisions and assessing performance. The Business segment facilitates real-time online interactions – chat, voice and content delivery across multiple channels and screens for global corporations of all sizes. The Consumer segment facilitates online transactions between Experts and Users and sells its services to consumers. Both segments currently generate their revenue primarily in the United States. The chief operating decision maker, who is the chief executive officer, evaluates performance, makes operating decisions, and allocates resources based on the operating income of each segment. The reporting segments follow the same accounting polices used in the preparation of the Company’s condensed consolidated financial statements which are described in the summary of significant accounting policies. The Company allocates cost of revenue, sales and marketing and amortization of purchased intangibles to the segments, but it does not allocate product development expenses, general and administrative expenses and income tax expense because management does not use this information to measure performance of the operating segments. There are currently no inter-segment sales.

Summarized financial information by segment for the three months ended March 31, 2015, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision maker, follows (amounts in thousands):

	Business		Consumer		Corporate			Consolidated
Revenue:
Hosted services – Business	$	50,613	$	—	$	—		$	50,613
Hosted services – Consumer	—		3,696		—			3,696
Professional services	5,461		—		—			5,461
Total revenue	56,074		3,696		—			59,770
Cost of revenue	15,617		637		—			16,254
Sales and marketing	22,852		1,442		—			24,294
Amortization of purchased intangibles	1,313		—		—			1,313
Unallocated corporate expenses	—		—		19,964			19,964
Operating income (loss)	$	16,292	$	1,617	$	(19,964	)	$	(2,055	)

Summarized financial information by segment for the three months ended March 31, 2014, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision maker, follows (amounts in thousands):

	Business		Consumer		Corporate			Consolidated
Revenue:
Hosted services – Business	$	39,680	$	—	$	—		$	39,680
Hosted services – Consumer	—		3,910		—			3,910
Professional services	4,238		—		—			4,238
Total revenue	43,918		3,910		—			47,828
Cost of revenue	11,220		515		—			11,735
Sales and marketing	16,918		1,477		—			18,395
Amortization of purchased intangibles	190		—		—			190
Unallocated corporate expenses	—		—		18,450			18,450
Operating income (loss)	$	15,590	$	1,918	$	(18,450	)	$	(942	)

Geographic Information

The Company is domiciled in the United States and has international operations in the United Kingdom, Asia-Pacific, Latin America and Western Europe, particularly France and Germany. The following table presents the Company’s revenues attributable to domestic and foreign operations for the periods presented (amounts in thousands):

	Three Months Ended
	March 31,
	2015		2014
United States	$	41,442	$	31,098
Other Americas (1)	2,703		2,150
Total Americas	44,145		33,248
EMEA (2)	11,784		10,515
APAC (3)	3,841		4,065
Total revenue	$	59,770	$	47,828

⁽¹⁾ Canada, Latin America and South America

⁽²⁾ Europe, the Middle East and Africa (“EMEA”)

⁽³⁾ Asia-Pacific (“APAC”)

The following table presents the Company's long-lived assets by geographic region for the periods presented (amounts in thousands):

	March 31,		December 31,
	2015		2014
United States	$	109,517	$	109,006
Israel	18,173		18,982
Australia	8,132		8,500
Netherlands	7,709		7,686
Other (1)	1,978		1,940
Total long-lived assets	$	145,509	$	146,114

⁽¹⁾ United Kingdom, Germany, Japan and Italy

No individual customer accounted for 10% or more of consolidated revenue for any of the periods presented. One customer accounted for approximately 16% and 22% of accounts receivable as of March 31, 2015 and December 31, 2014, respectively.

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock-Based Compensation Expense Related to Employee Stock Options

The following table summarizes stock-based compensation expense related to employee stock options under ASC 718-10 included in Company’s statements of operations for the periods presented (amounts in thousands):

	Three Months Ended
	March 31,
	2015		2014
Cost of revenue	$	328	$	360
Sales and marketing expense	595		814
Product development expense	939		680
General and administrative expense	932		843
Total stock based compensation included in costs and expenses	$	2,794	$	2,697

Weighted Average Assumptions of Fair Value Options Using Black-Scholes Option-Pricing Model

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Three Months Ended
	March 31,
	2015	2014
Dividend yield	0.0%	0.0%
Risk-free interest rate	1.3%	1.5%
Expected life (in years)	5	5
Historical volatility	49.7%	53.7%

Summary of Stock Option Activity and Weighted Average Exercise Prices

A summary of the Company’s stock option activity and weighted average exercise prices follows:

	Stock Option Activity				Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
	Options		Weighted Average Exercise Price
Balance outstanding at December 31, 2014	10,769,149		$	10.95
Granted	434,550		10.53
Exercised	(430,533	)	4.03
Cancelled or expired	(620,425	)	12.38
Balance outstanding at March 31, 2015	10,152,741		$	11.13	7.31	$	9,027
Options vested and expected to vest at March 31, 2015	8,600,976		$	11.13	7.01	$	8,766
Options exercisable at March 31, 2015	4,354,151		$	10.50	5.68	$	7,900

Summary of Status of Nonvested Shares

A summary of the status of the Company’s nonvested shares as of December 31, 2014, and changes during the three months endedMarch 31, 2015 is as follows:

	Options		Weighted Average Grant- Date Fair Value
Nonvested Shares at December 31, 2014	6,032,315		$	5.66
Granted	434,550		4.64
Vested	(47,850	)	5.10
Cancelled or expired	(620,425	)	6.09
Nonvested Shares at March 31, 2015	5,798,590		$	5.59

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Goodwill and Intangible Assets (Future Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
2015	$ 5,828
2016	6,755
2017	4,934
2018	2,815
2019	2,809
Thereafter	7,488
Total	$ 30,629

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Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Reconciliation of Shares Used in Calculating Basic and Diluted Earnings Per Share

A reconciliation of shares used in calculating basic and diluted earnings per share follows:

	Three Months Ended
	March 31,
	2015	2014
Basic	56,291,383	54,666,535
Effect of assumed exercised options	—	—
Diluted	56,291,383	54,666,535