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Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in “Risk Factors.”
−Removed: LivePerson, Inc.
−Removed: (“LivePerson”, the “Company”, “we” or “our”) makes life easier for people and brands everywhere through trusted Conversational AI.
+Added: LivePerson is a leading Conversational AI company creating digital experiences that are Curiously Human.
Conversational AI allows humans and machines to interact using natural language, including speech or text.
During the past decade, consumers have made mobile devices the center of their digital lives, and they have made mobile messaging the center of communication with friends, family and peers.
−Removed: This trend has been significantly accelerated by the COVID-19 pandemic and can now be viewed as a permanent, structural shift in consumer behavior.
−Removed: technology enables consumers to connect with businesses through these same preferred conversational interfaces, including Facebook Messenger, SMS, WhatsApp, Apple Business Chat, Google Rich Business Messenger and Alexa.
−Removed: These messaging conversations harness human agents, bots and Artificial Intelligence (AI) to power convenient, personalized and content-rich journeys across the entire consumer lifecycle, from discovery and research, to sales, service and support, and increasingly marketing, social, and brick and mortar engagements.
+Added: This trend has been significantly accelerated by the COVID-19 pandemic and we believe can now be viewed as a permanent, structural shift in consumer behavior.
+Added: Our technology enables consumers to connect with businesses through these same preferred conversational interfaces, including Facebook Messenger, SMS, WhatsApp, Apple Business Chat, Google Rich Business Messenger and Alexa.
+Added: These messaging conversations harness human agents, bots and AI to power convenient, personalized and content-rich journeys across the entire consumer lifecycle, from discovery and research, to sales, service and support, and increasingly marketing, social, and brick and mortar engagements.
For example, consumers can look up product info like ratings, images and pricing, search for stores, see product inventory, schedule appointments, apply for credit, approve repairs, and make purchases or payments - all without ever leaving the messaging channel.
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The Conversational Cloud, our enterprise-class cloud-based platform, enables businesses to become conversational by securely deploying AI-powered messaging at scale for brands with tens of millions of customers and many thousands of agents.
−Removed: The Conversational Cloud powers conversations across each of a brand’s primary digital channels, including mobile apps, mobile and desktop web browsers, short message service (SMS), social media and third-party consumer messaging platforms.
−Removed: Brands can also use the Conversational Cloud to message consumers when they dial a 1-800 number instead of forcing them to navigate interactive voice response systems (IVRs) and wait on hold.
+Added: The Conversational Cloud powers conversations across each of a brand’s primary digital channels, including mobile apps, mobile and desktop web browsers, SMS, social media and third-party consumer messaging platforms.
+Added: Brands can also use the Conversational Cloud to message consumers when they dial a 1-800 number instead of forcing them to navigate IVRs and wait on hold.
Similarly, the Conversational Cloud can ingest traditional emails and convert them into messaging conversations, or embed messaging conversations directly into web advertisements, rather than redirect consumers to static website landing pages.
Agents can manage all conversations with consumers through a single console interface, regardless of where the conversations originated.
−Removed: LivePerson's robust, cloud-based suite of rich messaging, real-time chat, AI and automation offerings features consumer and agent facing bots, intelligent routing and capacity mapping, real-time intent detection and analysis, queue prioritization, customer sentiment, analytics and reporting, content delivery, Payment Card Industry (PCI) compliance, cobrowsing and a sophisticated proactive targeting engine.
−Removed: An extensible application programming interface (API) stack facilitates a lower cost of ownership by facilitating robust integration into back-end systems, as well as enabling developers to build their own programs and services on top of the platform.
+Added: LivePerson’s robust, cloud-based suite of rich messaging, real-time chat, AI and automation offerings features consumer and agent facing bots, intelligent routing and capacity mapping, real-time intent detection and analysis, queue prioritization, customer sentiment, analytics and reporting, content delivery, PCI compliance, co-browsing and a sophisticated proactive targeting engine.
+Added: An extensible API stack facilitates a lower cost of ownership by facilitating robust integration into back-end systems, as well as enabling developers to build their own programs and services on top of the platform.
More than 40 APIs and software development kits are available on the Conversational Cloud.
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In the Conversational Space, consumers message with brands on their own schedule, using natural language, to resolve their intents - all on their preferred messaging service.
−Removed: The core capabilities
−Removed: of the Conversational Space are voice and text-based interfaces, powered by AI and humans working together.
+Added: The core capabilities of the Conversational Space are voice and text-based interfaces, powered by AI and humans working together.
Conversational Space is the simplest, most intuitive interface of all.
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LivePerson’s Conversational AI offerings put the power of bot development, training, management and analysis into the hands of the contact center and its agents, the teams most familiar with how to structure sales and service conversations to drive successful outcomes.
−Removed: The platform enables what we call “the tango” of humans, AI and bots, whereby human agents act as bot managers, overseeing AI-powered conversations and seamlessly stepping into the flow when a personal touch is needed.
+Added: The platform enables what we call “the tango” of humans, AI and bots, whereby human agents act as bot
+Added: managers, overseeing AI-powered conversations and seamlessly stepping into the flow when a personal touch is needed.
Agents become ultra-efficient, leveraging the AI engine to serve up relevant content, define next-best actions and take over repetitive transactional work, so that the agent can focus on relationship building.
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We are a leading authority in the Conversational Space.
−Removed: LivePerson’s products, coupled with our domain knowledge, industry expertise and professional services, have been proven to maximize the effectiveness of the Conversational Space and deliver measurable return on investment.
+Added: LivePerson’s products, coupled with our domain knowledge, industry expertise and professional services, have been proven to maximize the effectiveness of the Conversational Space and deliver measurable return on investment for our customers.
Certain of our customers have achieved the following advantages from our offerings:
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• labor efficiency gains of at least two times that of voice agents, effectively cutting labor costs by at least 50%;
−Removed: • improving the overall customer experience, thereby fueling customer satisfaction increases of up to 20 percentage points, and enhancing retention and loyalty;
+Added: • improving the overall customer experience, thereby fueling customer satisfaction score increases of up to 20 percentage points, and enhancing retention and loyalty;
• more convenient, personalized and content-rich conversations that increase sales conversion by up to 20%, increase average order value and reduce abandonment;
• more satisfied contact center agents, thereby reducing agent churn by up to 50%;
−Removed: • maintain a valued connection with consumers via mobile devices, either through native applications, websites, text messages, or third-party messaging platforms;
−Removed: • leverage spending that drives visitor traffic by increasing visitor conversions;
−Removed: • refine and improve performance by understanding which initiatives deliver the highest rate of return;
−Removed: • increase lead generation by providing a single platform that engages consumers through advertisements and listings on branded and third-party websites.
−Removed: As a “cloud computing” or software-as-a-service (SaaS) provider, LivePerson provides solutions on a hosted basis.
+Added: • a valued connection with consumers via mobile devices, either through native applications, websites, text messages, or third-party messaging platforms;
+Added: • leveraged spending that drives visitor traffic by increasing visitor conversions;
+Added: • refining and improving performance by understanding which initiatives deliver the highest rate of return;
+Added: • increased lead generation by providing a single platform that engages consumers through advertisements and listings on branded and third-party websites.
+Added: As a “cloud computing” or SaaS provider, LivePerson provides solutions on a hosted basis.
This model offers significant benefits over premise-based software, including lower up-front costs, faster implementation, lower total cost of ownership, scalability, cost predictability, and simplified upgrades.
Organizations that adopt a fully-hosted, multi-tenant architecture that is maintained by LivePerson eliminate the majority of the time, server infrastructure costs, and IT resources required to implement, maintain, and support traditional on-premise software.
−Removed: To further enhance our platform, in September 2020 we signed a partnership with Infosys, a leader in next-generation
−Removed: digital services and consulting.
−Removed: We will work with Infosys to transform our technology infrastructure on the public cloud, to
−Removed: build integrated solutions and a global practice around our Conversational Cloud to sell into their channels and global enterprise
−Removed: customer base, and to redefine how the world’s top brands communicate.
−Removed: More than 18,000 businesses, including HSBC, Orange, The Home Depot, and GM Financial use our conversational solutions to orchestrate humans and AI, at scale, and create a convenient, deeply personal relationship with their customers.
−Removed: LivePerson's consumer services offering is an online marketplace that connects independent service providers
−Removed: (Experts) who provide information and knowledge for a fee via mobile and online messaging with individual consumers (Users).
−Removed: Users seek assistance and advice in various categories including personal counseling and coaching, computers and
−Removed: programming, education and tutoring, spirituality and religion, and other topics.
+Added: To further enhance our platform, in September 2020 we signed a partnership with a digital services and consulting company to transform our technology infrastructure on the public cloud, to build integrated solutions and a global practice around our Conversational Cloud to sell into this company’s channels and global enterprise customer base, and to redefine how the world’s top brands communicate.
+Added: More than 18,000 businesses, including HSBC, Orange, and GM Financial use our conversational solutions to orchestrate humans and AI, at scale, and create a convenient, deeply personal relationship with their customers.
+Added: LivePerson’s consumer services offering is an online marketplace that connects Experts who provide information and knowledge for a fee via mobile and online messaging with Users.
+Added: Users seek assistance and advice in various categories including personal counseling and coaching, computers and programming, education and tutoring, spirituality and religion, and other topics.
The key elements of LivePerson’s business solutions strategy include:
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Since that time, we have been focused on building awareness for conversational experiences and driving adoption.
−Removed: We have educated businesses on the financial and operational transformation that occurs when a contact center shifts to an asynchronous messaging environment, where the consumer controls the pace of the conversation, which can last minutes, hours or days, from a synchronous call or chat center, where conversations occur in real-time and have a distinct start and end.
+Added: We have educated businesses on the financial and operational transformation that occurs when a contact center shifts to an asynchronous messaging environment, where the consumer controls the pace of the conversation, which can
+Added: last minutes, hours or days, from a synchronous call or chat center, where conversations occur in real-time and have a distinct start and end.
A key component of our industry awareness marketing strategy has been to hold multiple global customer summits each year (events in 2020 were held virtually in light of the COVID-19 pandemic) that target executives from enterprise customers and prospects, and feature a key theme within the Conversational Space, such as Apple Business Chat, Google Rich Business Messenger, IVR deflection or AI.
−Removed: LivePerson customers are the centerpoint of these summits, presenting why they chose LivePerson for conversational experiences, how they achieved success, and what type of ROI they have realized.
−Removed: Each attendee then receives a blueprint for how they can achieve similar outcomes.
+Added: LivePerson customers are the center point of these summits, presenting why they chose LivePerson for conversational experiences, how they achieved success, and what type of ROI they have realized.
+Added: Each attendee then receives a blueprint for how they can pursue similar outcomes.
We have found this strategy to drive strong results for LivePerson, as we have seen a greater than 40% conversion rate on opportunities that were created or advanced as part of the customer summits.
−Removed: By year-end 2020, we had brought approximately 400 customers live on messaging and increased adoption within our enterprise customers to 66%.
−Removed: In addition, nearly 70% of messaging conversations had automation attached.
+Added: By year-end 2021, nearly 75% of messaging conversations had automation attached.
We will continue to focus on building awareness for the Conversational Space and driving adoption of messaging and AI across our customer base.
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In order to drive broad messaging adoption, it is imperative that the Conversational Cloud integrates to all of the messaging apps that consumers prefer to use for communication and addresses all key use cases.
−Removed: For example, if a consumer is
−Removed: an avid WhatsApp user, and a brand only offers SMS as a messaging option, that consumer may be reluctant to try messaging the brand.
+Added: For example, if a consumer is an avid WhatsApp user, and a brand only offers SMS as a messaging option, that consumer may be reluctant to try messaging the brand.
Therefore, a key strategy of ours has been to build one of the industry’s broadest ecosystems of messaging endpoints and use cases.
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In 2020, we added Instagram and Google’s Business Messages, allowing brands to bring customer-initiated conversations into the Conversational Cloud directly from Instagram, Google Search, and Google Maps.
−Removed: Each channel and use case added opens the door to hundreds of millions of new consumers, providing brands a greater opportunity to shift share away from their legacy contact center channels into messaging.
+Added: Each channel and use case added opens the door to new consumers, providing brands a greater opportunity to shift share away from their legacy contact center channels into messaging.
For example, in 2019, leading airlines launched on WhatsApp and Apple Business Chat with the ability to make secure payments;
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Our Conversational AI leadership and the increase in adoption have influenced LivePerson’s enterprise and mid-market revenue retention rate, (the trailing-twelve-month change in total revenue from existing customers after upsells, downsells and attrition) which exceeded the high end of our target range of 105% to 115% for 2021.
−Removed: The benefit can also be seen in LivePerson’s average revenue per user (ARPU) for our enterprise and mid-market customers, which increased approximately 35% in 2020 to $465,000 from approximately $345,000 in 2019.
+Added: The benefit can also be seen in LivePerson’s ARPU for our enterprise and mid-market customers,
+Added: which increased approximately 31% in 2021 to $610,000 from approximately $465,000 in 2020.
+Added: We believe these ARPU trends are a clear indication of how LivePerson’s strategy to drive messaging adoption has successfully influenced our revenue growth by taking share from legacy communication channels.
Attract the industry’s best AI, machine learning and conversational talent.
We believe that AI and machine learning are critical to successfully scaling in the Conversational Space, and that in order to develop the industry’s leading technology, we need to attract the industry’s best talent.
−Removed: In 2018, LivePerson recruited Alex Spinelli, key architect of the Alexa Operating System at Amazon.com, as our Global CTO.
−Removed: Spinelli’s leadership, LivePerson hired more than 280 of the industry’s brightest data scientists, machine learning engineers and automation engineers, many from firms such as Nike, Amazon.com, Microsoft and Target, who are working exclusively on applying AI to the Conversational Space.
−Removed: LivePerson also expanded its development talent base in Germany, and added key development talent through the acquisitions of BotCentral in Mountain View, California and Conversable in Austin, Texas.
+Added: Since 2018, LivePerson hired more than 437 of the industry’s brightest data scientists, machine learning engineers and automation engineers, many from firms such as Nike, Amazon.com, Microsoft and Target, who are working exclusively on applying AI to the Conversational Space.
+Added: LivePerson also expanded its development talent base in Germany, and added key development talent through the acquisitions of BotCentral in Mountain View, California;
+Added: Tenfold in Austin, Texas;
+Added: e-bot7 in Munich, Germany;
+Added: and VoiceBase in San Francisco, California.
Bring to market best-in-class AI and machine learning technologies designed for the Conversational Space.
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• bot building software that is based on dialogue instead of workflow or code, so non-technical employees like contact center agents can design automations;
−Removed: • leveraging data moat from hundreds of millions of conversations to feed the machine learning that rapidly and accurately detects consumer sentiment and intents in real-time.
+Added: • leveraging a data moat from hundreds of millions of conversations to feed the machine learning that rapidly and accurately detects consumer sentiment and intents in real-time.
Customers of LivePerson can use intent understanding for advanced routing, next-best actions, and to fully contain conversations with automation;
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• the ability to bootstrap conversations with existing transcripts, reducing design effort and speeding time to market;
−Removed: • third-party AI natural language understanding (NLU) integration, so customers aren’t boxed into one vendor;
+Added: • third-party AI NLU integration, so customers are not boxed into one vendor;
• AI analytics and reporting tailored to the Conversational Space, providing brands with immediate, actionable insights about their businesses and contact center operations.
Our strategy is to continue to enhance the Conversational AI engine and related products, by leveraging our global R&D footprint and substantial library of mobile and online conversational data, with the aim of increasing agent efficiency, decreasing customer care costs, improving the customer experience and increasing customer lifetime value.
−Removed: Sustain our leadership position by aligning brands to a vision that transforms how they communicate with consumers and delivers a superior return on investment.
−Removed: We believe that most contact center technology vendors incorrectly view messaging as a feature.
−Removed: They are content with building integrations to a messaging endpoint and offering messaging as just another product in their suite.
−Removed: LivePerson holds the perspective that messaging and AI are the foundation for transforming conversational experiences, disrupting how agents operate and how brands engage with consumers.
+Added: Sustain our leadership position by aligning brands to a vision that transforms how they communicate with consumers and delivers a superior return on brands’ investment.
+Added: Over the past four years we have made good progress in developing our conversational AI platform and within the next 12 months, we expect to have a solution in place for our automations to self-heal, which is the ultimate goal of any AI platform.
+Added: Our acquisitions of VoiceBase and Tenfold provide us with a mechanism for data capture in the voice channel.
+Added: This additional data and the associated analytics and system integration give us an even greater ability to scale the usage of our platforms, by building on our strength in messaging.
Brands must adapt their contact centers to an asynchronous messaging environment and leverage a combination of human agents, bots, and AI to achieve scale and efficiencies.
−Removed: When done correctly, the entire consumer lifecycle with a brand will be maintained within the Conversational Space, and traffic will steadily shift away from lower returning voice calls, websites, emails and apps to higher returning messaging endpoints.
+Added: When done correctly, the entire consumer lifecycle with a brand will be maintained within the Conversational Space, and traffic will steadily shift away from lower returning traditional voice calls, websites, emails, and apps to higher returning messaging endpoints.
We believe that LivePerson is uniquely positioned to deliver this transformation due to our technology and expertise:
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Additionally, the Conversational Cloud is an open platform with pre-built, enterprise-grade integrations into back-end systems as well as the ability to work across NLU providers.
−Removed: • The Company has a data moat built on hundreds of millions of conversations across industries, geographies and use cases that is feeding the machine learning engines that power intent understanding.
+Added: • The Company believes it has a data moat built on hundreds of millions of conversations across industries, geographies and use cases that is feeding the machine learning engines that power intent understanding.
• The platform has expanded to power conversations across a broad spectrum of channels and use cases, from traditional sales and customer service, to marketing, social, email, advertising and brick and mortar.
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We are positioned as an authority in the Conversational Space.
−Removed: We have developed a Transformation Model that is introduced to existing and prospective customers to help guide them on their journeys from legacy and often times inefficient legacy voice, email and chat solutions to modern conversational ones powered by messaging and AI.
+Added: We have developed a Transformation Model that is introduced to existing and prospective customers to help guide them on their journeys from legacy and oftentimes inefficient legacy voice, email and chat solutions to modern conversational ones powered by messaging and AI.
+Added: • The Company has developed Gainshare - a Transformation Model that is introduced to existing and prospective customers to help guide them on their journeys from legacy and oftentimes inefficient legacy voice, email, and chat solutions to modern conversational ones powered by messaging and AI.
+Added: Gainshare is a fully managed solution where LivePerson not only provides the messaging and AI automation technology, but also the labor, automation, and end-to-end program management, leveraging the Company’s expertise with Conversational AI and messaging operations.
+Added: Gainshare is an option for brands that want to accelerate a transformation to Conversational AI, or that want a worry-free solution where LivePerson manages the entire operation, from
+Added: staffing to automation building and optimization, to conversation design and consumer experience.
+Added: Gainshare pricing is bespoke, and is typically structured around a brand’s desired goals, whether driving incremental revenue or reducing operational costs.
We believe that LivePerson’s differentiated approach to the Conversational Space, combined with our unique technology and expertise has established us as a market leader, with an ability to deliver superior returns on investment.
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Adding AI and bots provides even greater scale to the number of conversations managed.
−Removed: Our customers often see labor efficiency gains of at least two times that of voice agents, effectively cutting labor
−Removed: costs by at least 50%.
−Removed: Furthermore, our ability to deliver more convenient, personalized and content-rich conversations often drives increases in customer satisfaction of up to 20 percentage points and increases in sales conversions of up to 20%, while
−Removed: enhancing average order value, customer retention and loyalty.
+Added: Our customers often see labor efficiency gains of at least two times that of voice agents, effectively cutting labor costs by at least 50%.
+Added: Furthermore, our ability to deliver more convenient, personalized and content-rich conversations often drives increases in customer satisfaction of up to 20 percentage points and increases in sales conversions of up to 20%, while enhancing average order value, customer retention and loyalty.
Strengthen our position in both existing and new industries.
We plan to continue to develop our market position by increasing our customer base, and expanding within our installed base.
−Removed: We will continue to focus primarily on key target markets:
−Removed: consumer/retail, telecommunications, financial services, travel/hospitality, technology and automotive within both our enterprise and mid-market sectors, as well as the small business (SMB) sector.
+Added: We plan to continue to focus primarily on key target markets:
+Added: consumer/retail, telecommunications, financial services, travel/hospitality, technology and automotive within both our enterprise and mid-market sectors, as well as the SMB sector.
In 2019, we made strong inroads into new verticals with key wins in the airline, food service and healthcare industries.
In 2020, we strengthened our presence in key markets including travel/hospitality and retail, and opened new verticals like healthcare and government.
−Removed: We are experimenting
−Removed: with new conversational businesses, including some that are in regulated industries, like online banking.
+Added: In 2021, we continued to grow in verticals such
+Added: as healthcare and financial services, and expanded into new industries.
+Added: We are experimenting with new conversational businesses, including some that are in regulated industries, like online banking and healthcare.
We are increasingly structuring our field organization to emphasize our domain expertise and strengthen customer relationships across target industries.
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We are generating positive results from our recent investments in the Asia Pacific, Europe, and Latin America regions.
+Added: Expanding go-to-market capacity in international theaters is one of our key strategic focuses and also part of our motivation for our recent acquisition of e-bot7.
Leverage our open architecture to support partners and developers.
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Customers and partners can utilize these APIs to build our capabilities into their own applications and to enhance our applications with their services.
−Removed: In 2019, we launched LivePerson Functions, a serverless Function as a Service (FaaS) integration which enables brands to develop custom behaviors within LivePerson's conversational platform to easily and rapidly tailor conversation flows to their specific needs.
+Added: In 2019, we launched LivePerson Functions, a serverless FaaS integration which enables brands to develop custom behaviors within LivePerson’s conversational platform to easily and rapidly tailor conversation flows to their specific needs.
Expand sales partnerships to broaden our presence and accelerate sales cycles.
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In 2019, we announced strategic partnerships with TTEC, a leading BPO focused on customer experience, and DMI, a digital transformation company, to redefine the customer experience with digital engagement, messaging, and AI-driven automation.
−Removed: In 2020, Infosys joined LivePerson’s network with a first-of-its-kind 360-degree partnership focusing not only on capturing the global rising demand for conversational commerce and building a personalized experience for customers, but also driving the transformation for internal corporate messaging and the employee experience through Conversational AI.
−Removed: LivePerson increased the number of partners focused on SMBs to more than 300 at year-end 2020 and 2019, from over 150 at year-end 2018, and approximately 40 at the end of 2017.
−Removed: Approximately one quarter of all opportunities were influenced by partners in 2020, and we are focused on driving that contribution toward 50% longer term.
+Added: In 2020, a digital services and consulting company joined LivePerson’s network with a first-of-its-kind 360 degree partnership focusing not only on capturing the global rising demand for conversational commerce and building a personalized experience for customers, but also driving the transformation for internal corporate messaging and the employee experience through Conversational AI.
+Added: In 2021, we announced strategic integration partnerships with Google Cloud, Adobe and Medallia to help brands make contact center agents more efficient and effective, and empower and enrich the management of customer and employee experience through the power of AI.
+Added: Our network also expanded with the Tech Mahindra partnership to help brands deliver personalized conversational experiences to consumers at scale.
Maintain market leadership in technology and security expertise.
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Evaluate strategic alliances and acquisitions when appropriate.
−Removed: We have successfully integrated several acquisitions over the past decade.
−Removed: While we have in the past, and may from time to time in the future, engage in discussions regarding acquisitions or strategic transactions or to acquire other companies that can accelerate our growth or broaden our product offerings, we currently have no binding commitments with respect to any future acquisitions or strategic transactions.
+Added: In July 2021, we acquired German conversational AI company e-bot7, which propels our self-service capabilities and continued growth across Europe.
+Added: In October 2021, we acquired VoiceBase, a leader in real-time speech recognition and conversational analytics;
+Added: and Tenfold, an advanced customer engagement platform for integrating communication systems with leading CRM and support services.
+Added: Once fully integrated, we expect these acquisitions to allow LivePerson to deliver our AI and automation capabilities, insights, and integration as a single integrated product offering across all channels including voice and messaging.
Financial overview of the three and twelve months ended December 31, 2021 compared to the comparable periods in 2020 is as follows:
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• Revenue from our Business segment increased 21% and 28% to $114.1 million and $431.9 million in the three and twelve months ended December 31, 2021, respectively, from $94.1 million and $336.9 million in the comparable periods in 2020.
−Removed: • Gross profit margin increased to 73% in the three months ended December 31, 2020 from 72% in the comparable period in 2019.
+Added: • Gross profit margin decreased to 64% in the three months ended December 31, 2021 from 73% in the comparable period in 2020.
Gross profit margin decreased to 67% in the twelve months ended December 31, 2021 from 71% in the comparable period in 2020.
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• Trailing-twelve-month average revenue per enterprise and mid-market customer was approximately $610,000 in 2021, as compared to approximately $465,000 in 2020.
−Removed: • Revenue retention rate for enterprise and mid-market customers on Conversational Cloud exceeded the high end of our target range of 105% to 115% in 2020, and was within our target range of 105% to 115% for 2019.
−Removed: The majority of our revenue is generated from monthly service revenues and related professional services from the sale of the LivePerson services.
−Removed: We charge a monthly fee, which varies by service and customer usage.
−Removed: The majority of our larger customers also pay a professional services fee related to implementation and ongoing optimization services.
+Added: • Revenue retention rate for enterprise and mid-market customers on Conversational Cloud exceeded the high end of our target range of 105% to 115% in 2021 and 2020.
+Added: Adjusted EBITDA and Adjusted Operating Income (Loss)
+Added: To provide investors with additional information regarding our financial results, we have disclosed adjusted EBITDA and adjusted operating income (loss) which are non-GAAP financial measures.
+Added: The tables below present a reconciliation of adjusted EBITDA and adjusted operating income (loss) to net loss, the most directly comparable GAAP financial measures.
+Added: We have included adjusted EBITDA and adjusted operating income (loss) in this Annual Report on Form 10-K 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.
+Added: In particular, the exclusion of certain expenses in calculating adjusted EBITDA and adjusted operating income (loss) can provide a useful measure for period-to-period comparisons of our core business.
+Added: 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.
+Added: Accordingly, we believe that adjusted EBITDA and adjusted operating income (loss) 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.
+Added: 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.
+Added: Some of these limitations are:
+Added: • 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;
+Added: • adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
+Added: • adjusted EBITDA does not consider the impact of acquisition related costs;
+Added: • adjusted EBITDA does not consider the impact of restructuring costs;
+Added: • adjusted EBITDA does not consider the impact of other costs;
+Added: • adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
+Added: • other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
+Added: Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including various pre-tax GAAP loss and our other GAAP results.
+Added: The following table presents a reconciliation of adjusted EBITDA for each of the periods indicated:
+Added: Year Ended December 31,
+Added: 2021 2020 2019 2018 2017
+Added: (In thousands)
+Added: Reconciliation of Adjusted EBITDA:
+Added: GAAP net loss $ (124,974) $ (107,594) $ (96,071) $ (25,032) $ (18,191)
+Added: Amortization of purchased intangibles and finance leases 9,327 3,552 2,932 2,813 4,682
+Added: Stock-based compensation 69,656 65,946 44,105 14,841 8,944
+Added: Contingent earn-out adjustments 132 263 — — —
+Added: Restructuring costs (1)
+Added: 3,397 29,420 2,043 4,468 2,594
+Added: Depreciation 27,423 22,826 16,366 14,188 12,358
+Added: Other litigation and consulting costs (2)
+Added: 6,665 5,375 7,974 5,928 7,648
+Added: (Benefit from) provision for income taxes (2,404) 2,466 2,845 858 501
+Added: Acquisition costs 5,808 — — 555 —
+Added: Interest expense (income), net 37,406 14,334 7,407 (22) (26)
+Added: Other (income) expense, net (3)
+Added: (3,294) 1,343 (1,213) 493 (110)
+Added: Adjusted EBITDA (loss) $ 29,142 $ 37,931 $ (13,612) $ 19,090 $ 18,400
+Added: ——————————————
+Added: (1) Includes severance costs and other compensation related costs of $2.7 million and lease restructuring costs of $0.7 million for the year ended December 31, 2021.
+Added: Includes lease restructuring costs of $24.3 million and severance and other compensation related costs of $5.1 million for the year ended December 31, 2020.
+Added: Includes severance and associated costs of $2.0 million for the year ended December 31, 2019.
+Added: Includes severance costs of $4.5 million for the year ended December 31, 2018.
+Added: Includes wind down costs of legacy platform of $1.9 million and severance costs of $0.7 million for the year ended December 31, 2017.
+Added: The restructuring costs relate to resource reallocation for the Company’s platform transformation.
+Added: (2) Includes litigation costs of $4.1 million, employee benefit costs of $0.5 million, consulting costs of $2.4 million, and a reversal of reserve for sales and use tax liability of $0.3 million for the year ended December 31, 2021.
+Added: Includes other litigation costs of $5.4 million for the year ended December 31, 2020.
+Added: Includes other litigation costs of $4.4 million relating to the Company’s intellectual property lawsuit against [24]7 Customer, Inc., consulting costs of $3.2 million, and fair value earn-out adjustment of $0.3 million for the year ended December 31, 2019.
+Added: Includes litigation costs of $4.1 million, consulting costs of $1.3 million, executive recruitment costs of $0.3 million, and executive relocation costs of $0.2 million for the year ended December 31, 2018.
+Added: Includes litigation costs of $6.2 million, executive one-time compensation payment of $1.0 million, and executive separation cost of $0.5 million for the year ended December 31, 2017.
+Added: Other litigation costs relate to lease restructuring costs, along with other general legal matters.
+Added: (3) Includes $3.5 million of other income related to the settlement of leases for the year ended December 31, 2021.
+Added: The remaining amount of other (income) expense is attributable to currency rate fluctuations.
+Added: Our use of adjusted operating income (loss) 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.
+Added: Some of these limitations are:
+Added: • although amortization is a non-cash charge, the assets being amortized may have to be replaced in the future, and adjusted operating income (loss) does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
+Added: • adjusted operating income (loss) does not consider the impact of acquisition related costs;
+Added: • adjusted operating income (loss) does not consider the impact of restructuring costs;
+Added: • adjusted operating income (loss) does not consider the impact of other costs;
+Added: • other companies, including companies in our industry, may calculate adjusted operating income (loss) differently, which reduces its usefulness as a comparative measure.
+Added: Because of these limitations, you should consider adjusted operating income (loss) alongside other financial performance measures, including various pre-tax GAAP loss and our other GAAP results.
+Added: The following table presents a reconciliation of adjusted operating income (loss) for each of the periods indicated:
+Added: Year Ended December 31,
+Added: 2021 2020 2019 2018 2017
+Added: (In thousands)
+Added: Reconciliation of Adjusted Operating Income (Loss)
+Added: Loss before provision for income taxes $ (127,378) $ (105,128) $ (93,226) $ (24,174) $ (17,690)
+Added: Amortization of purchased intangibles and finance leases 9,327 3,552 2,932 2,813 4,682
+Added: Stock-based compensation 69,656 65,946 44,105 14,841 8,944
+Added: Restructuring costs (1)
+Added: 3,397 29,420 2,043 4,468 2,594
+Added: Other litigation and consulting costs (2)
+Added: 6,665 5,375 7,974 5,928 7,648
+Added: Contingent earn-out adjustments 132 263 — — —
+Added: Acquisition costs 5,808 — — 555 —
+Added: Interest expense (income), net 37,406 14,334 7,407 (22) (26)
+Added: Other expense (income), net (3)
+Added: (3,294) 1,343 (1,213) 493 (110)
+Added: Adjusted operating income (loss) $ 1,719 $ 15,105 $ (29,978) $ 4,902 $ 6,042
+Added: ——————————————
+Added: (1) Includes severance costs and other compensation related costs of $2.7 million and lease restructuring costs of $0.7 million for the year ended December 31, 2021.
+Added: Includes lease restructuring costs of $24.3 million and severance and other compensation related costs of $5.1 million for the year ended December 31, 2020.
+Added: Includes severance and associated costs of $2.0 million for the year ended December 31, 2019.
+Added: Includes severance costs of $4.5 million for the year ended December 31, 2018.
+Added: Includes wind down costs of legacy platform of $1.9 million and severance costs of $0.7 million for the year ended December 31, 2017.
+Added: The restructuring costs relate to resource reallocation for the Company’s platform transformation.
+Added: (2) Includes litigation costs of $4.1 million, employee benefit costs of $0.5 million, consulting costs of $2.4 million, and a reversal of reserve for sales and use tax liability of $0.3 million for the year ended December 31, 2021.
+Added: Includes other litigation costs of $5.4 million for the year ended December 31, 2020.
+Added: Includes other litigation costs of $4.4 million relating to the Company’s intellectual property lawsuit against [24]7 Customer, Inc., consulting costs of $3.2 million, and fair value earn-out adjustment of $0.3 million for the year ended December 31, 2019.
+Added: Includes litigation costs of $4.1 million, consulting costs of $1.3 million, executive recruitment costs of $0.3 million, and executive relocation costs of $0.2 million for the year ended December 31, 2018.
+Added: Includes litigation costs of $6.2 million, executive one-time compensation payment of $1.0 million, and executive separation cost of $0.5 million for the year ended December 31, 2017.
+Added: Other litigation costs relate to lease restructuring costs, along with other general legal matters.
+Added: (3) Includes $3.5 million of other income related to the settlement of leases for the year ended December 31, 2021.
+Added: The remaining amount of other (income) expense is attributable to currency rate fluctuations.
+Added: Critical Accounting Policies and Estimates
+Added: Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America.
+Added: As such, we are required to make certain estimates, judgments and assumptions that management believes are reasonable based upon the information available.
+Added: 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.
+Added: 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.
+Added: We believe that the assumptions and estimates associated with revenue recognition, depreciation, stock-based compensation, accounts receivable, the valuation of goodwill and intangible assets, income taxes and legal contingencies have the greatest potential impact on our consolidated financial statements.
+Added: We evaluate these estimates on an ongoing basis.
+Added: Actual results could differ from those estimates under different assumptions or conditions, and any differences could be material.
+Added: For further information on all of our significant accounting policies, see Note 1 – Description of Business and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.
+Added: Revenue Recognition
+Added: The majority of our revenue is generated from hosted service revenues, which is inclusive of our platform usage pricing model, and related professional services from the sale of our services.
+Added: Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
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.
−Removed: 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.
+Added: Such customers also have more
+Added: 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.
We determine revenue recognition through the following steps:
3 unchanged sentences
• allocation of the transaction price to the performance obligations in the contract;
−Removed: • recognition of revenue when, or as, the Company satisfies a performance obligation.
−Removed: For more information about our revenue recognition policies, please see “-- Critical Accounting Policies and Estimates
−Removed: -- Revenue Recognition.”
+Added: • recognition of revenue when, or as, we satisfy a performance obligation.
+Added: Total revenue of $469.6 million, $366.6 million, and $291.6 million was recognized during the years ended December 31, 2021, December 31, 2020, and December 31, 2019, respectively.
+Added: We defer all incremental commission costs to obtain the contract (contract acquisition costs).
+Added: The contract acquisition costs consist of prepaid sales commissions and have balances as of December 31, 2021 and December 31, 2020 of $40.7 million and $41.0 million, respectively.
+Added: We amortize these costs over the related period of benefit using the expected life of the customer contract, which we determine to be three to five years, consistent with the transfer to the customer of the services to which the asset relates.
+Added: We classify contract acquisition costs as long-term unless they have an original amortization period of one year or less.
Hosted Services - Business Revenue
−Removed: Revenue attributable to our monthly hosted Business services accounted for 78% of total revenue for the year ended December 31, 2020, 77% of total revenue for the year ended December 31, 2019 and 79% of total revenue for the year ended December 31, 2018.
+Added: Hosted services - Business revenue is reported at the amount that reflects the ultimate consideration expected to be received and primarily consist of fees that provide customers access to the Conversational Cloud.
+Added: We have determined such access represents a stand-ready service provided continually throughout the contract term.
+Added: As such, control and satisfaction of this stand-ready performance obligation is deemed to occur over time.
+Added: We recognize this revenue over time on a ratable basis over the contract term, beginning on the date that access to the Conversational Cloud platform is made available to the customer.
+Added: The passage of time is deemed to be the most faithful depiction of the transfer of control of the services as the customer simultaneously receives and consumes the benefit provided by our performance.
+Added: Subscription contracts are generally one year or longer in length, billed monthly, quarterly or annually in advance.
+Added: Additionally, for certain of our larger customers, we may provide call center labor through an arrangement with one or more of several qualified vendors.
+Added: For most of these customers, we pass the fee we incur with the labor provider and its 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.
+Added: For these Gainshare arrangements, we act as a principal in a transaction if we control the specified goods or services before they are transferred to the customer.
+Added: Revenue attributable to our monthly hosted Business services accounted for 78% of total revenue for the years ended December 31, 2021 and 2020, and 77% of total revenue for the year ended December 31, 2019.
Professional Services Revenue
−Removed: Revenue attributable to professional services accounted for 14% of total revenue for the year ended December 31, 2020, 14% of total revenue for the year ended December 31, 2019 and 13% of total revenue for the year ended December 31, 2018.
+Added: Professional Services revenue primarily consists of fees for deployment and optimization services, as well as training delivered on an on-demand basis which is deemed to represent a distinct stand-ready performance obligation and is recognized at a point in time.
+Added: Professional Services revenue is reported at the amount that reflects the ultimate consideration we expect to receive in exchange for such services.
+Added: Control for the majority of our Professional Services contracts passes over time to the customer and is recognized ratably over the contracted period, as the passage of time is deemed to be the most faithful depiction of the transfer of control.
+Added: For certain deployment services, which are not deemed to represent a distinct performance obligation, revenue will be recognized in the same manner as the fee for access to the Conversational Cloud platform, and as such will be recognized on a straight-line basis over the contract term.
+Added: For services billed on a fixed price basis, revenue is recognized over time based on the proportion performed using time and materials as the measure of progress toward complete satisfaction of the performance obligation.
+Added: Our Professional Services contracts are generally one year or longer in length, billed monthly, quarterly or annually in advance.
+Added: There is no significant variable consideration related to these arrangements.
+Added: Revenue attributable to Professional Services accounted for 14% of total revenue for the years ended December 31, 2021, 2020, and 2019.
Contracts with Multiple Performance Obligations
4 unchanged sentences
Hosted Services- Consumer Revenue
−Removed: Revenue from our Consumer segment accounted for approximately 8% of total revenue for the years ended December 31, 2020, 2019 and 2018, respectively.
+Added: For revenue from our Consumer segment generated from online transactions between Experts and Users, revenue is recognized at an amount net of Expert fees primarily because the Expert is the primary obligor.
+Added: We do not act as a principal in a transaction since we do not control the specified goods or services before they are transferred to the customer.
+Added: Additionally, we perform as an agent without any risk of loss for collection, and we are not involved in selecting the Expert or establishing the Expert’s fee.
+Added: We collect a fee from the consumer and retain a portion of the fee, and then remit the balance to the Expert.
+Added: Revenue from these transactions is recognized at the point in time when the transaction is complete and no significant performance obligations remain.
+Added: Revenue from our Consumer segment accounted for approximately 8% of total revenue for each of the years ended December 31, 2021, 2020, and 2019, respectively.
+Added: Remaining Performance Obligation
+Added: As of December 31, 2021, the aggregate amount of the total transaction price allocated in contracts with original duration of one year or greater to the remaining performance obligations was $362.8 million.
+Added: Approximately 94% of our remaining performance obligations is expected to be recognized during the next 24 months, with the balance recognized thereafter.
+Added: The aggregate balance of unsatisfied performance obligations represents contracted revenue that has not yet been recognized, and does not include contract amounts that are cancellable by the customer, amounts associated with optional renewal periods, and any amounts related to performance obligations, which are billed and recognized as they are delivered.
+Added: We have elected the optional exemption, which allows for the exclusion of the amounts for remaining performance obligations that are part of contracts with an original expected duration of less than one year.
+Added: Such remaining performance obligations represent unsatisfied or partially unsatisfied performance obligations pursuant to ASC 606.
Deferred Revenues
We record deferred revenues when cash payments are received or due in advance of our performance.
−Removed: The decrease of $0.1 million in the deferred revenue balance for the year ended December 31, 2020 is primarily driven by satisfying our performance obligations and the revenue recognized of approximately $103.2 million that were included in the deferred revenue balance as of December 31, 2019.
+Added: The increase of $9.6 million in the deferred revenue balance for the year ended December 31, 2021 is primarily driven by cash payments received or due in advance of satisfying our performance obligations, partially offset by approximately $75.5 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2020.
Costs and Expenses
18 unchanged sentences
Non-Cash Compensation Expense
−Removed: The net non-cash compensation amounts for the years ended December 31, 2020, 2019 and 2018 consist of (amounts in thousands):
+Added: The net non-cash compensation amounts are as follows:
+Added: Year Ended December 31,
2021 2020 2019
+Added: (In thousands)
Stock-based compensation expense $ 69,656 $ 65,946 $ 44,105
+Added: Stock-Based Compensation
+Added: 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.
+Added: 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).
+Added: Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.
+Added: Our forfeiture rate assumptions, which estimate the share-based awards that will ultimately vest, requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period of change and could be materially different from share-based compensation expense recorded in prior periods.
+Added: For the year ended December 31, 2021, we accrued approximately $18.4 million for cash awards related to bonus to be settled in shares of our stock and recorded a corresponding expense, which is included as a component of stock-based compensation expense in the accompanying consolidated financial statements.
+Added: For the year ended December 31, 2020, we accrued approximately $20.4 million and $8.9 million for cash awards related to bonus and for the achievement of long term incentive plan awards, respectively, to be settled in shares of our stock and recorded a corresponding expense, which is included as a component of stock-based compensation expense in the accompanying consolidated financial statements.
+Added: As of December 31, 2021, there was approximately $44.8 million of total unrecognized compensation cost related to nonvested stock options.
+Added: That cost is expected to be recognized over a weighted average period of approximately 2.7 years.
+Added: As of December 31, 2021, there was approximately $141.9 million of total unrecognized compensation cost related to nonvested restricted stock units.
+Added: That cost is expected to be recognized over the remaining weighted average period of approximately 3.2 years.
+Added: Accounts Receivable
+Added: 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.
+Added: 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.
+Added: Although our large number of customers limits our concentration of credit risk, if we experience a significant write-off from one of our large customers, it could have a material adverse impact on our consolidated financial statements.
+Added: No single customer accounted for or exceeded 10% of our total revenue in 2021, 2020 and 2019.
+Added: During 2021, we increased our allowance for doubtful accounts from approximately $5.3 million to approximately $6.3 million.
+Added: A large proportion of receivables are due from larger corporate customers that typically have longer payment cycles.
+Added: Accounts receivable is presented net of an allowance for doubtful accounts and sales reserve of $6.3 million and $4.1 million as of December 31, 2021, respectively, and $5.3 million and $3.4 million as of December 31, 2020, respectively.
+Added: An allowance for doubtful accounts is established for losses expected to be incurred on accounts receivable balances.
+Added: Judgment is required in the estimation of the allowance and we evaluate the collectability of our accounts receivable based on a combination of factors.
+Added: If we become aware of a customer’s inability to meet its financial obligations, a specific allowance is recorded to reduce the net receivable to the amount reasonably believed to be collectible from the customer.
+Added: For all other customers, we use an aging schedule and recognize allowances for doubtful accounts based on the creditworthiness of the debtor, the age and status of outstanding receivables, the current business environment and our historical collection experience adjusted for current expectations for the customer or industry.
+Added: Accounts receivable are written off against the allowance for uncollectible accounts when we determine amounts are no longer collectible.
+Added: Goodwill represents the excess of the aggregate purchase price over the fair value of net identifiable assets acquired in a business combination.
+Added: During 2021, we added $198.2 million to goodwill with the acquisition of e-bot7, VoiceBase, Inc., and Tenfold.
+Added: Goodwill is not amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
+Added: We have determined that we operates as two reporting units and have selected September 30 as the date to perform our annual impairment test.
+Added: In the valuation of goodwill, management must make assumptions regarding estimated future cash flows to be derived from our business.
+Added: If these estimates or their related assumptions change in the future, the Company may be required to record impairment for these assets.
+Added: We have the option to first perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
+Added: However, we may elect to bypass the qualitative assessment and proceed directly to the quantitative impairment tests.
+Added: The impairment test involves comparing the fair value of the reporting unit to its carrying value, including goodwill.
+Added: A goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value.
+Added: The impairment is limited to the carrying amount of goodwill.
+Added: No goodwill impairment charges have been recorded for any period presented.
+Added: Impairment of Long-Lived Assets
+Added: The carrying amounts of our long-lived assets, including property and equipment, lease right-of-use assets, capitalized internal-use software, costs to obtain customer contracts, and acquired intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful lives are shorter than originally estimated.
+Added: Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to future undiscounted net cash flows the asset is expected to generate over its remaining life.
+Added: If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset.
+Added: If the useful life is shorter than originally estimated, we amortize the remaining carrying value over the new shorter useful life.
+Added: There was a loss on disposal of approximately $5.1 million in October 2020.
+Added: We recognized accelerated depreciation of fixed assets that were determined to no longer be of future economic benefit to us based on the decision to vacate the leased office space.
+Added: Income taxes are accounted for under the asset and liability method.
+Added: Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
+Added: Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
+Added: In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.
+Added: The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are expected to become deductible.
+Added: Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
+Added: The Company includes interest accrued on the underpayment of income taxes in interest expense and penalties, if any, related to unrecognized tax benefits in general and administrative expenses.
+Added: The Company recorded a valuation allowance against its U.S.
+Added: and Germany deferred tax assets as it considered its cumulative loss in recent years as a significant piece of negative evidence.
+Added: Since valuation allowances are evaluated on a jurisdiction by jurisdiction basis, we believe that the deferred tax assets related to LivePerson Australia, LivePerson UK, Kasamba Israel, LivePerson Japan and LivePerson LTD Israel are more likely than not to be realized as these jurisdictions have positive cumulative pre-tax book income after adjusting for permanent and one-time items.
+Added: During the year ended December 31, 2021, there was an increase in the valuation recorded of $51.7 million.
+Added: Legal Contingencies
+Added: We are subject to legal proceedings and litigation arising in the ordinary course of business.
+Added: Periodically, we evaluate the status of each legal matter and assess our potential financial exposure.
+Added: 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.
+Added: Significant judgment is required to determine the probability of a loss and whether the amount of the loss is reasonably estimable.
+Added: The outcome of any proceeding is not determinable in advance.
+Added: 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.
+Added: As additional information becomes available, we reassess the potential liability related to the legal proceeding or litigation, and may revise our estimates.
+Added: Any revisions could have a material effect on our results of operations.
+Added: See Note 15 – Legal Matters in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information on our legal proceedings and litigation.
+Added: Recently Issued Accounting Standards
+Added: See Note 1 – Description of Business and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for a full description of recently issued accounting standards.
+Added: Recently Adopted Accounting Pronouncements
+Added: See Note 1 – Description of Business and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for a full description of recently adopted accounting pronouncements.
Results of Operations
2 unchanged sentences
The Consumer segment facilitates online transactions between Experts and Users seeking information and knowledge for a fee via mobile and online messaging.
−Removed: The following tables set forth our results of operations for the periods presented and as a percentage of our revenues for those periods.
+Added: The following tables set forth our results of operations for the years presented and as a percentage of our revenues for those periods.
The period-to-period comparison of financial results is not necessarily indicative of future results.
−Removed: Year Ended December 31,
−Removed: 2020 2019 2018
−Removed: (as a percentage of revenue)
−Removed: Consolidated Statements of Operations Data:
−Removed: Revenue 100 % 100 % 100 %
−Removed: Costs and expenses:
−Removed: Cost of revenue (3)
−Removed: 29 % 27 % 25 %
−Removed: Sales and marketing
−Removed: 41 % 54 % 41 %
−Removed: General and administrative
−Removed: 17 % 20 % 18 %
−Removed: Product development
−Removed: 30 % 28 % 22 %
−Removed: Restructuring costs
−Removed: Amortization of purchased intangibles
−Removed: Total costs and expenses
−Removed: 124 % 130 % 109 %
−Removed: Loss from operations
−Removed: (24) % (30) % (9) %
−Removed: Total Other (expense) income, net (4) % (2) % — %
−Removed: Loss before provision for income taxes (29) % (32) % (10) %
−Removed: Provision for income taxes 1 % 1 % — %
−Removed: Net loss (29) % (33) % (10) %
−Removed: (1) Certain items may not total due to rounding.
Year Ended December 31, Year Ended December 31,
2021 2020 % Change 2020 2019 % Change
−Removed: (in thousands) (in thousands)
+Added: (Dollars in thousands)
Revenue by Segment:
3 unchanged sentences
Business revenue increased by 28% to $431.9 million for the year ended December 31, 2021, from $336.9 million for the year ended December 31, 2020.
−Removed: This increase in Business revenue is driven mainly by increases in hosted services of approximately $60.9 million and an increase in professional services of approximately $8.8 million.
+Added: This increase in Business revenue is driven primarily by increases in hosted services of approximately $77.6 million and an increase in Professional Services of approximately $17.4 million.
Included in hosted services is an increase in revenue that is variable based on interactions and usage of approximately $37.6 million.
1 unchanged sentence
This increase in Business revenue is primarily attributable to an increase in hosted services of approximately $60.9 million and an increase in Professional Services of approximately $8.8 million.
−Removed: The increase in Business revenue was driven in nearly equal parts by existing and new customers as LivePerson generated greater demand for its Conversational Commerce software and Gainshare (formerly “ Pay for Performance ” ) solutions.
−Removed: In the wake of the COVID-19 pandemic, leading brands are turning to LivePerson's AI-powered messaging to overcome a capacity gap created by voice call agent work-from-home measures and increased demand for digital engagement as consumers practice social distancing.
−Removed: LivePerson is powering Conversational AI, automation and messaging strategies across a growing number of use cases from care and sales, to marketing, social, conversational advertising, and brick and mortar.
+Added: Included in hosted services is an increase in revenue that is variable based on interactions and usage of approximately $30.1 million.
+Added: The increase in Business revenue was driven in nearly equal parts by existing and new customers as we generated greater demand for its Conversational Commerce software and Gainshare solutions.
+Added: In the wake of the COVID-19 pandemic, leading brands are turning to our AI-powered messaging to overcome a capacity gap created by voice call agent work-from-home measures and increased demand for digital engagement as consumers practice social distancing.
+Added: We are powering Conversational AI, automation and messaging strategies across a growing number of use cases from care and sales, to marketing, social, conversational advertising, and brick and mortar.
As adoption increases, we are seeing higher revenue per customer.
−Removed: Our average annual revenue per enterprise and midmarket customer was approximately $465,000 in 2020, as compared to approximately $345,000 in 2019.
+Added: However, in the fourth quarter of 2021, we observed that pandemic-specific shopping trends began to normalize within the Gainshare portfolio, including the type and frequency of purchases and a more balanced interest in physical, in-store experiences.
+Added: Our ARPU for our enterprise and mid-market customers was approximately $610,000 in 2021, as compared to approximately $465,000 in 2020.
Similarly, we are seeing strong revenue retention rates.
−Removed: Revenue retention rate for enterprise and mid-market customers on Conversational Cloud exceeded the high end of our target range of 105% to 115% in 2020, and was within our target range of 105% to 115% for 2019.
+Added: Revenue retention rate for enterprise and mid-market customers on Conversational Cloud exceeded the high end of our target range of 105% to 115% in 2021 and 2020.
Consumer revenue increased by 26.6% to $37.7 million for the year ended December 31, 2021, from $29.8 million for the year ended December 31, 2020.
−Removed: This increase is primarily attributable to an increase in chat minutes and price per minute.
+Added: This improvement was driven by an increasingly effective user value and higher demand by consumers to engage with experts and advisors through conversational messaging channels.
Consumer revenue increased by 22% to $29.8 million for the year ended December 31, 2020, from $24.5 million for the year ended December 31, 2019.
1 unchanged sentence
Cost of Revenue - Business
−Removed: Cost of revenue consists of compensation costs relating to employees who provide customer service to our customers, compensation costs relating to our network support staff, the cost of supporting our server and network infrastructure, and allocated occupancy costs and related overhead.
+Added: Cost of revenue - business consists of compensation costs relating to employees who provide customer service to our customers, compensation costs relating to our network support staff, outside labor provider costs, the cost of supporting our server and network infrastructure, and allocated occupancy costs and related overhead.
Year Ended December 31, Year Ended December 31,
2021 2020 % Change 2020 2019 % Change
−Removed: ($ in thousands) ($ in thousands)
+Added: (Dollars in thousands)
Cost of revenue - business $ 149,983 $ 99,394 51 % $ 99,394 $ 74,460 33 %
2 unchanged sentences
Cost of revenue increased by 51% to $150.0 million for the year ended December 31, 2021, from $99.4 million for the year ended December 31, 2020.
−Removed: This increase in expense is primarily attributable to an increase in business services and outsourced subcontracted labor of approximately $17.0 million as the Company saw a significant increase in demand for its Gainshare (formerly “Pay for Performance”) services, which power Conversational Commerce programs on behalf of customers.
−Removed: The Company also recognized an increase in salary and employee related expenses of approximately $5.0 million, in expenses for backup server facilities of approximately $1.6 million, in depreciation expense of approximately $1.2 million and in amortization expense of approximately $0.8 million.
+Added: This increase in expense is primarily attributable to an increase in business services and outsourced subcontracted labor of approximately $30.5 million driven by Health and Gainshare services, which power Conversational Commerce programs on behalf of customers.
+Added: We also recognized an increase in expenses for backup server facilities of approximately $11.2 million, in salary and employee related expenses of approximately $3.0 million, and in amortization expense of approximately $5.4 million.
Cost of revenue increased by 33% to $99.4 million for the year ended December 31, 2020, from $74.5 million for the year ended December 31, 2019.
−Removed: This increase in expense is primarily attributable to an increase in business services and outsourced subcontracted labor of approximately $7.2 million, in salary and related employee expenses of approximately $4.4 million, in expenses for backup server facilities of approximately $4.0 million and in depreciation expense of approximately $0.5 million.
+Added: This increase in expense is primarily attributable to an increase in business services and outsourced subcontracted labor of approximately $17.0 million as the Company saw a significant increase in demand for its Gainshare services, which power Conversational Commerce programs on behalf of customers.
+Added: The Company also recognized an increase in salary and employee related expenses of approximately $5.0 million, in expenses for backup server facilities of approximately $1.6 million, in depreciation expense of approximately $1.2 million, and in amortization expense of approximately $0.8 million.
Cost of Revenue - Consumer
−Removed: Cost of revenue consists of compensation costs relating to employees who provide customer service to Experts and Users, compensation costs relating to our network support staff, the cost of supporting our server and network infrastructure, credit card and transaction processing fees and related costs, and allocated occupancy costs and related overhead.
+Added: Cost of revenue - consumer consists of compensation costs relating to employees who provide customer service to Experts and Users, compensation costs relating to our network support staff, the cost of supporting our server and network infrastructure, credit card and transaction processing fees and related costs, and allocated occupancy costs and related overhead.
Year Ended December 31, Year Ended December 31,
2021 2020 % Change 2020 2019 % Change
−Removed: ($ in thousands) ($ in thousands)
+Added: (Dollars in thousands)
Cost of revenue - consumer $ 6,897 $ 6,874 — % $ 6,874 $ 4,418 56 %
1 unchanged sentence
Headcount (at period end) 15 21 (29) % 21 17 24 %
−Removed: Cost of revenue increased by 56% to $6.9 million for the year ended December 31, 2020, from $4.4 million for the year ended December 31, 2019.
+Added: Cost of revenue - consumer remained flat at $6.9 million for the year ended December 31, 2021 compared to the year ended December 31, 2020.
+Added: Cost of revenue - consumer increased by 56% to $6.9 million for the year ended December 31, 2020, from $4.4 million for the year ended December 31, 2019.
This increase in expense is primarily related to an increase in outsourcing subcontracted labor of approximately $1.3 million is due to the investment in technology infrastructure.
1 unchanged sentence
In addition, there was an increase in salary and employee related expenses of approximately $0.4 million, in credit card processing fees of approximately $0.3 million, in depreciation expense of approximately $0.3 million, and backup server facilities of approximately $0.1 million.
−Removed: Cost of revenue increased by 9% to $4.4 million for the year ended December 31, 2019, from $4.1 million for the year ended December 31, 2018.
−Removed: This increase in expense is primarily related to an increase in credit card processing fees of approximately $0.3 million.
Sales and Marketing - Business
−Removed: Our sales and marketing expenses consist of compensation and related expenses for sales and marketing personnel, as well as advertising, public relations, trade show exhibit expenses and allocated occupancy costs and related overhead.
+Added: Our Sales and marketing - business expenses consist of compensation and related expenses for sales and marketing personnel, as well as advertising, marketing events, public relations, trade show exhibit expenses and allocated occupancy costs and related overhead.
Year Ended December 31, Year Ended December 31,
2021 2020 % Change 2020 2019 % Change
−Removed: ($ in thousands) ($ in thousands)
+Added: (Dollars in thousands)
Sales and marketing - business $ 139,866 $ 128,752 9 % $ 128,752 $ 140,880 (9) %
1 unchanged sentence
Headcount (at period end) 460 309 49 % 309 449 (31) %
−Removed: Sales and marketing expenses decreased by 9% to $128.8 million for the year ended December 31, 2020, from $140.9 million for the year ended December 31, 2019.
+Added: Sales and marketing - business expenses increased by 9% to $139.9 million for the year ended December 31, 2021, from $128.8 million for the year ended December 31, 2020.
+Added: This is primarily related to an increase in salary and employee related expenses of approximately $7.7 million, an increase in marketing events, advertising, and public relations of approximately
+Added: $6.6 million, and an increase in depreciation expense of approximately $0.2 million, partially offset by a decrease in business services and outsourcing subcontracted labor of approximately $3.4 million.
+Added: We have adjusted our marketing and hiring efforts to account for the impact of the COVID-19 pandemic.
+Added: In particular, we have adapted our marketing strategy to include targeted digital experiences that emphasize the unique positioning of our messaging and AI offerings to help brands succeed in this new environment.
+Added: Our marketing message has shifted to include business continuity and virtualization of the contact center in addition to business improvement.
+Added: Sales and marketing - business expenses decreased by 9% to $128.8 million for the year ended December 31, 2020, from $140.9 million for the year ended December 31, 2019.
This is primarily related to a decrease in salary and employee related expenses of approximately $7.5 million, a decrease in marketing events, advertising, public relations, and trade show exhibit expenses of approximately $3.3 million, and a decrease in business services and outsourcing subcontracted labor of approximately $2.6 million.
These decreases were offset in part by an increase in backup server facilities of approximately $0.7 million and in depreciation expense of approximately $0.6 million.
−Removed: In 2020, the Company delayed its planned marketing events due to the COVID-19 pandemic and has also seen an impact in terms of the on-boarding and hiring of employees.
−Removed: The Company has been able to adjust its marketing and hiring efforts in this new environment going forward.
−Removed: Additionally, we have adapted our marketing strategy to include targeted digital experiences that emphasize the unique positioning of our messaging and AI offerings to help brands succeed in this new environment.
−Removed: Our marketing message has shifted to include business continuity and virtualization of the contact center in addition to business improvement.
−Removed: Sales and marketing expenses increased by 49% to $140.9 million for the year ended December 31, 2019, from $94.3 million for the year ended December 31, 2018.
−Removed: This is primarily related to an increase in salary, recruitment, and related employee expenses of approximately $29.5 million, as the Company doubled the number of quota carrying salespeople to approximately 100 at year-end 2019 from 50 at year-end 2018.
−Removed: Business services and outsourced labor increased approximately $6.5 million, and marketing events, advertising, public relations, and trade show exhibit expenses increased approximately $5.4 million.
−Removed: Other costs consisted of increases in facilities and allocated overhead of $5.1 million, and in depreciation expense of $0.1 million.
Sales and Marketing - Consumer
−Removed: Our sales and marketing expenses consist of compensation and related expenses for marketing personnel, as well as online promotion and trade show exhibit expenses and allocated occupancy costs and related overhead.
+Added: Our Sales and marketing - consumer expenses consist of compensation and related expenses for marketing personnel, as well as online promotion, public relations, and allocated occupancy costs and related overhead.
Year Ended December 31, Year Ended December 31,
2021 2020 % Change 2020 2019 % Change
−Removed: ($ in thousands) ($ in thousands)
+Added: (Dollars in thousands)
Sales and marketing - consumer $ 25,555 $ 21,021 22 % $ 21,021 $ 15,934 32 %
1 unchanged sentence
Headcount (at period end) 17 19 (11) % 19 18 6 %
−Removed: Sales and marketing expenses increased by 32% to $21.0 million for the year ended December 31, 2020, from $15.9 million for the year ended December 31, 2019.
+Added: Sales and marketing - consumer expenses increased by 22% to $25.6 million for the year ended December 31, 2021, from $21.0 million for the year ended December 31, 2020.
+Added: This increase is primarily attributable to an increase in marketing expense of approximately $4.2 million, an increase in outsourcing subcontracted labor of approximately $0.2 million, and an increase in salary and employee related expenses of approximately $0.2 million.
+Added: Sales and marketing - consumers expenses increased by 32% to $21.0 million for the year ended December 31, 2020, from $15.9 million for the year ended December 31, 2019.
This increase is primarily attributable to an increase in marketing expense of approximately $4.8 million, in outsourcing subcontracted labor of approximately $0.2 million, and credit card processing fees of approximately $0.1 million.
−Removed: Sales and marketing expenses increased by 77% to $15.9 million for the year ended December 31, 2019, from $9.0 million for the year ended December 31, 2018.
−Removed: This increase is primarily attributable to an increase in advertising and online expenses of approximately $6.7 million, and an increase in compensation and related costs for additional and existing sales and marketing personnel of approximately $0.2 million.
General and Administrative
−Removed: Our general and administrative expenses consist primarily of compensation and related expenses for executive, accounting, legal, information technology, human resources and administrative personnel, professional fees and other general corporate expenses.
+Added: Our general and administrative expenses consist of compensation and related expenses for executive, accounting, legal, human resources and administrative personnel, professional fees and other general corporate expenses.
Year Ended December 31, Year Ended December 31,
2021 2020 % Change 2020 2019 % Change
−Removed: ($ in thousands) ($ in thousands)
+Added: (Dollars in thousands)
General and administrative $ 76,757 $ 60,557 27 % $ 60,557 $ 56,967 6 %
2 unchanged sentences
General and administrative expenses increased by 27% to $76.8 million for the year ended December 31, 2021, from $60.6 million for the year ended December 31, 2020.
−Removed: This is primarily related to a increase in salary and employee related expenses of approximately $4.3 million and in business services and outsourced labor of approximately $2.6 million.
+Added: This is primarily related to an increase in in business services and outsourced labor of approximately $7.1 million, an increase in acquisition related costs of $5.8 million, an increase in one time charges of $3.9 million, an increase in salary and employee related expenses of approximately $0.2 million, and an increase in amortization of approximately $0.4 million.
These increases were offset in part by a decrease in facilities of approximately $1.1 million and depreciation expense of approximately $0.1 million.
General and administrative expenses increased by 6% to $60.6 million for the year ended December 31, 2020, from $57.0 million for the year ended December 31, 2019.
−Removed: This is primarily related to an increase in salaries and employee related expenses of approximately $9.2 million and in business services and outsourced labor of approximately $3.8 million.
−Removed: These increases were offset in part by a decrease in allocated occupancy costs, related overhead, information technology, and other general corporate expenses of approximately $1.9 million.
+Added: This is primarily related to an increase in salary and employee related expenses of approximately $4.3 million and in business services and outsourced labor of approximately $2.6 million.
+Added: These increases were offset in part by a decrease in facilities of approximately $2.7 million and depreciation expense of approximately $0.7 million.
Product Development
−Removed: Our product development expenses consist primarily of compensation and related expenses for product development personnel as well as allocated occupancy costs and related overhead and outsourced labor and expenses for testing new versions of our software.
+Added: Our product development expenses consist of compensation and related expenses for product development personnel as well as allocated occupancy costs and related overhead and outsourced labor and expenses for testing new versions of our software.
Year Ended December 31, Year Ended December 31,
2021 2020 % Change 2020 2019 % Change
−Removed: ($ in thousands) ($ in thousands)
+Added: (Dollars in thousands)
Product development $ 158,390 $ 108,414 46 % $ 108,414 $ 82,145 32 %
3 unchanged sentences
This is primarily related to an increase in salaries and employee related expenses of approximately $34.4 million, in business services and outsourcing subcontracted labor of approximately $7.6 million, in backup server facilities of approximately $3.5 million related to costs supporting our backup servers and in depreciation expense of approximately $4.4 million.
−Removed: The Company made investments in public cloud migration, and in enhancing and expanding new features of the Conversational Cloud.
−Removed: Also, the Company invested in bringing more data scientists and machine learning engineers to focus on Conversational Al.
+Added: We continued to make investments in public cloud migration, and in enhancing and expanding new features of the Conversational Cloud, including Voice.
+Added: Also, we continued to invest in bringing more data scientists and machine learning engineers to focus on Conversational Al.
Product development costs increased by 32% to $108.4 million for the year ended December 31, 2020, from $82.1 million for the year ended December 31, 2019.
−Removed: This is primarily related to an increase in compensation, recruitment, and related costs of approximately $15.3 million, as the Company built out its Seattle Advanced Technology Center, ending 2019 with more than 125 data scientists, machine learnings engineers and automation engineers focused on Conversational AI.
−Removed: The increase was also related to an increase in outsourced labor of approximately $5.0 million, primarily tied to supporting demand
−Removed: for technical services.
−Removed: Facility, allocated occupancy costs and overhead related to costs of supporting our server and network infrastructure increased approximately $4.3 million, depreciation expenses increased approximately $1.5 million, and marketing related costs increased $0.3 million.
+Added: This is primarily related to an increase in salaries and employee related expenses of approximately $11.9 million, in business services and outsourcing subcontracted labor of approximately $8.6 million, in backup server facilities of approximately $1.1 million related to costs supporting our backup servers and in depreciation expense of approximately $5.0 million.
+Added: We made investments in public cloud migration, and in enhancing and expanding new features of the Conversational Cloud.
+Added: Also, we invested in bringing more data scientists and machine learning engineers to focus on Conversational Al.
We continue to invest in new product development efforts to expand the capability of the Conversational Cloud.
1 unchanged sentence
Upon completion, the project costs will be depreciated over five years.
−Removed: During the years ended December 31, 2020 and 2019, $33.9 million and $29.1 million was capitalized, respectively.
+Added: During the years ended December 31, 2021, 2020, and 2019, $36.1 million, $33.9 million, and $29.1 million was capitalized, respectively.
Restructuring Costs
+Added: Restructuring costs consist of reprioritizing and reallocating resources to focus on areas believed to show high growth potential.
Year Ended December 31, Year Ended December 31,
2021 2020 % Change 2020 2019 % Change
−Removed: ($ in thousands) ($ in thousands)
+Added: (Dollars in thousands)
Restructuring Costs $ 3,397 $ 29,420 (89) % $ 29,420 $ 2,043 1,340 %
Percentage of total revenue 1 % 8 % 8 % 1 %
+Added: Restructuring costs decreased by 89% to $3.4 million for the year ended December 31, 2021, from $29.4 million for the year ended December 31, 2020.
+Added: This decrease is attributable primarily as a result of a decrease in restructuring costs related to lease abandonment recorded in 2020.
Restructuring costs increased by 1,340% to $29.4 million for the year ended December 31, 2020, from $2.0 million for the year ended December 31, 2019.
5 unchanged sentences
The lease restructuring costs noted above are a result of this transition to an employee-centric workforce model that does not rely on traditional offices.
−Removed: Restructuring costs decreased by 54% to $2.0 million for the year ended December 31, 2019, from $4.5 million for the year ended December 31, 2018.
−Removed: This decrease is attributable to a decrease in severance and other associated costs of approximately $2.5 million.
−Removed: Severance costs are associated with re-prioritizing and reallocating resources to focus on areas showing high growth potential.
+Added: During the second quarter of 2021, the Company decided to reoccupy some of its leased space to provide its employees with the option of working in an office space environment if they choose to do so.
Amortization of Purchased Intangibles
1 unchanged sentence
2021 2020 % Change 2020 2019 % Change
−Removed: ($ in thousands) ($ in thousands)
+Added: (Dollars in thousands)
Amortization of purchased intangibles $ 2,045 $ 1,639 25 % $ 1,639 $ 1,794 (9) %
Percentage of total revenue — % — % — % 1 %
−Removed: Amortization expense for purchased intangibles decreased by 9% to $1.6 million for the year ended December 31, 2020, from $1.8 million for the year ended December 31, 2019, and increased by 7% to $1.8 million for the year ended December 31, 2019, from $1.7 million for the year ended December 31, 2018.
−Removed: The year over year variance is primarily attributable to amortization of patents and customer relationships.
−Removed: Other (Expense) Income, net
−Removed: Other income, net primarily 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.
−Removed: dollar against the New Israeli Shekel, Pound Sterling, Japanese Yen, Australian dollar and the Euro.
+Added: Amortization expense for purchased intangibles increased by 25% to $2.0 million for the year ended December 31, 2021, from $1.6 million for the year ended December 31, 2020, and decreased by 9% to $1.6 million for the year ended December 31, 2020, from $1.8 million for the year ended December 31, 2019.
+Added: The year over year variance is primarily attributable to amortization of patents and customer relationships as well as the intangible assets acquired in the three acquisitions that occurred in 2021.
+Added: Additional amortization expense in the amount of $7.3 million, $1.9 million, and $1.1 million for the years ended December 31, 2021, 2020, and 2019, respectively, is included in cost of revenue.
+Added: The increase from 2020 to 2021 was due to the three acquisitions that occurred in 2021.
+Added: See Note 9 – Acquisitions in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for a full description of the acquisitions.
+Added: Other Expense, net
+Added: Other expense, net consists of interest income on cash and cash equivalents, investment income, and financial (expense) income which is a result of currency rate fluctuations associated with exchange rate movement of the U.S.
+Added: dollar against the New Israeli Shekel, British Pound, Euro, Australian Dollar, and Japanese Yen.
Year Ended December 31, Year Ended December 31,
2021 2020 % Change 2020 2019 % Change
−Removed: ($ in thousands) ($ in thousands)
−Removed: Interest (expense) income (14,334) (7,407) 94 % (7,407) 22 (33,768) %
+Added: (Dollars in thousands)
+Added: Interest expense $ (37,406) $ (14,334) 161 % $ (14,334) $ (7,407) 94 %
Other income (expense) 3,294 (1,343) 345 % (1,343) 1,213 (211) %
−Removed: Other (expense) income, net $ (15,677) $ (6,194) 153 % $ (6,194) $ (471) 1,215 %
−Removed: Other (expense) income increased by $9.5 million to an expense of $15.7 million for the year ended December 31, 2020, from an expense of $6.2 million for the year ended December 31, 2019.
−Removed: This increase was primarily attributable to an increase in interest expense attributable to the 0.750% Convertible Senior Notes due 2024 (the ‘‘2024 Notes’’), offset in part by interest income on cash and cash equivalents and financial income which is attributable to currency rate fluctuations.
−Removed: Other (expense) income increased by $5.7 million to an expense of $6.2 million for the year ended December 31, 2019, from an income of $0.5 million for the year ended December 31, 2018.
−Removed: This was primarily attributable to an increase in interest expense attributable to the 2024 Notes, offset in part by interest income on cash and cash equivalents and financial income which is attributable to currency rate fluctuations.
−Removed: Provision for Income Taxes
+Added: Other expense, net $ (34,112) $ (15,677) 118 % $ (15,677) $ (6,194) 153 %
+Added: Other expense, net increased by $18.4 million to an expense of $34.1 million for the year ended December 31, 2021, from an expense of $15.7 million for the year ended December 31, 2020.
+Added: This increase was primarily attributable to an increase in interest expense attributable to the 2024 Notes and the 2026 Notes, partially offset by interest income on cash and cash equivalents and financial income which is attributable to currency rate fluctuations.
+Added: Other expense, net increased by $9.5 million to an expense of $15.7 million for the year ended December 31, 2020, from an expense of $6.2 million for the year ended December 31, 2019.
+Added: This increase was primarily attributable to an increase in interest expense attributable to the 2024 Notes, partially offset by interest income on cash and cash equivalents and financial income which is attributable to currency rate fluctuations.
+Added: (Benefit From) Provision For Income Taxes
Year Ended December 31, Year Ended December 31,
2021 2020 % Change 2020 2019 % Change
−Removed: ($ in thousands) ($ in thousands)
−Removed: Provision for income taxes $ 2,466 $ 2,845 (13) % $ 2,845 $ 858 232 %
+Added: (Dollars in thousands)
+Added: Provision for (benefit from) income taxes $ (2,404) $ 2,466 (198) % $ 2,466 $ 2,845 (13) %
+Added: We had a tax benefit from income taxes of $2.4 million for the year ended December 31, 2021 and a provision for income taxes of $2.5 million for the year ended December 31, 2020.
+Added: Our consolidated effective tax rate was impacted by the statutory income tax rates applicable to each of the jurisdictions in which we operate.
+Added: During 2021, the Company recorded a benefit of $3.2 million for a release of valuation allowance on certain LivePerson, Inc.
+Added: net operating losses in connection with the acquisitions of Tenfold and VoiceBase.
+Added: The decrease in tax expense is primarily due to these factors.
Income tax expense decreased by 13% to $2.5 million for the year ended December 31, 2020, from $2.8 million for the year ended December 31, 2019.
2 unchanged sentences
The decrease in tax expense is primarily due to these factors.
−Removed: Income tax expense increased by 232% to $2.8 million for the year ended December 31, 2019, from $0.9 million for the year ended December 31, 2018.
−Removed: Our consolidated effective tax rate was impacted by the statutory income tax rates applicable to each of the jurisdictions in which we operate.
−Removed: During 2018, we recognized a benefit of $2.0 million related to a settlement with the Israeli Tax Authority.
−Removed: As a result of the settlement, we recognized a benefit as the recorded liability was less than the final settlement.
−Removed: A benefit was also recorded for U.S.
−Removed: federal tax refunds that were recognized due to increased foreign tax credits and increased federal NOLs from foreign tax deductions.
−Removed: The increase in tax expense was primarily due to these factors.
We had a net loss of $125.0 million for the year ended December 31, 2021 compared to a net loss of $107.6 million for the year ended December 31, 2020.
−Removed: Revenue increased approximately $75.0 million, operating expenses increased by approximately $77.4 million, the provision for income taxes decreased approximately $0.4 million, and other (expense) income net increased by $9.5 million, contributing to a net increase in net loss of approximately $11.5 million.
+Added: Revenue increased approximately $103.0 million, operating expenses increased by approximately $106.8 million, the benefit from income taxes increased approximately $4.9 million, and other expense, net increased by $18.4 million, contributing to a net increase in net loss of approximately $17.4 million.
We had a net loss of $107.6 million for the year ended December 31, 2020 compared to a net loss of $96.1 million for the year ended December 31, 2019.
−Removed: Revenue increased approximately $41.8 million, operating expenses increased by approximately $105.1 million, the provision for income taxes increased approximately $2.0 million, and other (expense) income, net decreased by approximately $5.7 million, contributing to a net increase in net loss of approximately $71.0 million.
−Removed: Quarterly Results of Operations Data
−Removed: The following table sets forth, for the periods indicated, the Company’s financial information for the eight most recent quarters ended December 31, 2020.
−Removed: In the Company’s opinion, this unaudited information has been prepared on a basis consistent with the annual consolidated financial statements and includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the unaudited information for the periods presented.
−Removed: This information should be read in conjunction with the consolidated financial statements, including the related notes, included herein.
−Removed: Quarter ended
−Removed: 31, 2020 Sept.
−Removed: 2020 June 30,
−Removed: 2020 March 31,
−Removed: 31, 2019 Sept.
−Removed: 2019 June 30,
−Removed: 2019 March 31,
−Removed: (in thousands, except share and per share data)
−Removed: Consolidated Statements of Operations Data:
−Removed: Revenue $ 102,125 $ 94,804 $ 91,603 $ 78,088 $ 79,073 $ 75,175 $ 70,959 $ 66,402
−Removed: Costs and Expenses:
−Removed: Cost of revenue 28,049 27,692 27,707 22,820 22,060 20,120 18,049 18,649
−Removed: Sales and marketing 39,700 32,775 34,618 42,680 42,661 41,774 39,343 33,036
−Removed: General and administrative 12,844 14,891 16,353 16,469 15,079 13,958 13,763 14,167
−Removed: Product development 27,995 27,736 26,967 25,716 23,213 20,577 20,182 18,173
−Removed: Restructuring costs (212) 26,442 — 3,190 134 1,425 205 279
−Removed: Amortization of purchased intangibles 419 411 404 405 448 447 438 461
−Removed: Total costs and expenses 108,795 129,947 106,049 111,280 103,595 98,301 91,980 84,765
−Removed: Loss from operations (6,670) (35,143) (14,446) (33,192) (24,522) (23,126) (21,021) (18,363)
−Removed: Interest expense, net (5,173) (3,159) (3,211) (2,791) (2,535) (2,189) (2,017) (667)
−Removed: Other (expense) income, net 1,141 (508) (1,309) (667) 352 379 (250) 733
−Removed: Total Other (expense) income, net (4,032) (3,667) (4,520) (3,458) (2,183) (1,810) (2,267) 66
−Removed: Loss before provision for income taxes (benefit from) (10,702) (38,810) (18,966) (36,649) (26,705) (24,936) (23,288) (18,297)
−Removed: Provision for (benefit from) income taxes 2,553 (100) (339) 352 617 936 699 593
−Removed: Net loss $ (13,255) $ (38,710) $ (18,627) $ (37,001) $ (27,322) $ (25,872) $ (23,987) $ (18,890)
−Removed: Net loss per share of common stock:
−Removed: Basic $ (0.20) $ (0.58) $ (0.28) $ (0.57) $ (0.43) $ (0.41) $ (0.38) $ (0.31)
−Removed: Diluted $ (0.20) $ (0.58) $ (0.28) $ (0.57) $ (0.43) $ (0.41) $ (0.38) $ (0.31)
−Removed: Weighted-average shares used to compute net loss per share
−Removed: Basic 67,027,572 66,451,414 65,650,782 64,388,850 63,556,205 63,014,802 62,350,787 61,422,227
−Removed: Diluted 67,027,572 66,451,414 65,650,782 64,388,850 63,556,205 63,014,802 62,350,787 61,422,227
+Added: Revenue increased approximately $75.0 million, operating expenses increased by approximately $77.4 million, the provision for income taxes decreased approximately $0.4 million, and other expense, net increased by approximately $9.5 million, contributing to a net increase in net loss of approximately $11.5 million.
Liquidity and Capital Resources
6 unchanged sentences
Cash flows provided by financing activities 11,843 483,843 217,851
−Removed: As of December 31, 2020, we had approximately $654.2 million in cash and cash equivalents, an increase of approximately $477.6 million from December 31, 2019.
−Removed: The increase is primarily attributable to cash provided by financing activities relating to issuance of the 2026 Notes, as described in Note 7 of the Notes to the Consolidated Financial Statements, and the issuance of common stock.
−Removed: This was partially offset by purchases of capped calls, as described in Note 7 of the Notes to
−Removed: the Consolidated Financial Statements, fixed assets for our co-location facilities, capitalization of internally developed software, debt issuance costs, and increases in prepaid expenses and accounts receivable.
+Added: As of December 31, 2021, we had approximately $521.8 million in cash and cash equivalents, a decrease of approximately $130.6 million from December 31, 2020.
+Added: The decrease is primarily attributable to cash used in investing activities related to the acquisitions of e-bot7, VoiceBase, and Tenfold partially offset by proceeds from issuance of common stock in connection with the exercise of options and the ESPP.
Net cash provided by operating activities was $3.2 million in the year ended December 31, 2021.
−Removed: Our net loss was $107.6 million, which includes the effect of non-cash expenses related to stock-based compensation, amortization of purchased intangibles and finance leases, depreciation, and provision for doubtful accounts, as well as increases in operating lease liability due to the transition to an employee centric model under which employees will work remotely, and increase in accrued expenses and decrease in accounts receivable.
+Added: Our net loss was $125.0 million, which includes the effect of non-cash expenses related to stock-based compensation, amortization of purchased intangibles and finance leases, depreciation, provision for doubtful accounts, and gain on termination of lease, as well as increases in accrued expenses and deferred revenue.
+Added: This was partially offset by increases in accounts receivable, prepaid expenses and decrease in operating lease liability.
+Added: Net cash provided by operating activities was $33.6 million in the year ended December 31, 2020.
+Added: Our net loss was $107.6 million, which includes the effect of non-cash expenses related to stock-based compensation, amortization of purchased intangibles and finance leases, depreciation, and provision for doubtful accounts, as well as increases in operating lease liability due to the transition to an employee centric model under which employees will
+Added: work remotely, and increase in accrued expenses and decrease in accounts receivable.
This was partially offset by increases in prepaid expenses and other current assets and decrease in deferred revenue.
−Removed: Net cash used in operating activities w as $59.2 million in the year ended December 31, 2019.
−Removed: Our net loss was $96.1 million, which includes the effect of non-cash expenses related to stock-based compensation, amortization of purchased intangibles, depreciation, and provision for doubtful accounts, as well as increases in deferred revenue due to more of our customers moving to cash payments in advance on annual billings and in accounts payable and accrued expenses.
−Removed: This was partially offset by increases in prepaid expenses, other current assets and accounts receivable, and decrease in deferred tax liability.
+Added: Net cash used in investing activities was $140.2 million in the year ended December 31, 2021 was driven primarily by the acquisition costs related to goodwill for the purchase of e-bot7, VoiceBase, and Tenfold, the purchase of fixed assets for our co-location facilities, capitalization of internally developed software, and the repayment of the indebtedness acquired with e-bot7, VoiceBase, and Tenfold.
Net cash used in investing activities was $43.5 million in the year ended December 31, 2020 due primarily to the purchase of fixed assets for our co-location facilities and capitalization of internally developed software.
−Removed: Net cash used in investing activities was $48.5 million in the year ended December 31, 2019 and consisted primarily of the purchase of fixed assets for our co-location facilities and capitalization of internally developed software.
+Added: Net cash provided by financing activities was $11.8 million in the year ended December 31, 2021 due primarily to the proceeds from issuance of common stock in connection with the exercise of stock options by employees partially offset by the finance lease payment.
Net cash provided by financing activities was $483.8 million in the year ended December 31, 2020 due primarily to the proceeds from issuance of the 2026 Notes and proceeds from issuance of common stock in connection with the exercise of stock options by employees.
This was partially offset by purchases of capped calls, debt issuance costs, and payment of our finance lease.
−Removed: The net proceeds of the 2026 Notes was approximately $506.6 million, after deducting initial purchaser debt issuance costs paid or payable by us, from issuance of the 2026 Notes, as described in Note 7 of the Notes to the Consolidated Financial Statements.
−Removed: Net cash provided by financing activities was $217.9 million in the year ended December 31, 2019 and consisted primarily of proceeds from issuance of the 2024 Notes and proceeds from issuance of common stock in connection with the exercise of stock options by employees.
−Removed: This was partially offset by purchases of capped calls, debt issuance costs, and repurchase of our common stock.
−Removed: The net proceeds of the 2024 Notes was approximately $221.4 million, after deducting initial purchaser debt issuance costs paid or payable by us, from issuance of the 2024 Notes, as described in Note 7 of the Notes to the Consolidated Financial Statements.
+Added: The net proceeds of the 2026 Notes was approximately $506.6 million, after deducting initial purchaser debt issuance costs paid or payable by us, from issuance of the 2026 Notes, as described in Note 8 – Convertible Senior Notes and Capped Call Transactions of the Notes to the Consolidated Financial Statements.
+Added: 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.
+Added: Historically, we have incurred net losses and negative cash flows for various quarterly and annual periods since our inception, including during numerous quarters and annual periods in the past several years.
+Added: As of December 31, 2021, we had an accumulated deficit of approximately $516.9 million.
+Added: In response to the COVID-19 pandemic, we had undertaken a re-evaluation of our real estate needs.
+Added: In connection with this re-evaluation, and the success we have had working remotely for the past several months, we significantly reduced the real estate space we lease.
+Added: This resulted in various one-time cash expenses in connection with early termination of some of our leases.
+Added: During the second quarter of 2021, we decided to reoccupy some of our leased space to provide our employees with the option of working in an office space environment if they choose to do so as well as provide some remote shared space working locations globally.
+Added: Our principal sources of liquidity are the net proceeds from the issuance of our convertible senior notes, after deducting purchaser discounts and debt issuance costs paid by us, issuance of common stock in connection with the exercise of options, and payments received from customers using our products.
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 12 months.
1 unchanged sentence
We cannot assure you that additional funding will be available on favorable terms, when needed, if at all.
−Removed: 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.
+Added: 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 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.
−Removed: Off Balance Sheet Arrangements
−Removed: 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.
−Removed: Contractual Obligations and Commitments
−Removed: We lease facilities and certain equipment under agreements accounted for as operating and finance leases.
−Removed: These leases generally require us to pay all executory costs such as maintenance and insurance.
−Removed: Total lease cost for the years ended December 31, 2020, 2019 and 2018, was approximately $13.5 million, $13.0 million and $10.9 million, respectively.
−Removed: As of December 31, 2020, our principal commitments were approximately $24.4 million under various operating and finance leases, of which approximately $10.2 million is due in 2021.
−Removed: We currently expect that our principal commitments for the year ending December 31, 2021 will not exceed approximately $10.2 million in the aggregate.
−Removed: Our contractual obligations at December 31, 2020 are summarized as follows (amounts in thousands):
−Removed: Payments Due by Period
−Removed: Contractual Obligations Total Less Than
−Removed: 1 Year 1 – 3 Years 3 – 5 Years More Than
−Removed: Operating leases $ 14,197 $ 6,377 $ 5,759 $ 1,798 $ 263
−Removed: Finance leases $ 10,200 $ 3,814 $ 6,386 $ — $ —
−Removed: Convertible senior notes (1)
−Removed: $ — $ — $ — $ 230,000 $ 517,500
−Removed: Total $ 24,397 $ 10,191 $ 12,145 $ 231,798 $ 517,763
−Removed: (1) See Note 7 of the Notes to the Consolidated Financial Statements included elsewhere in this Form 10-K for a discussion of our convertible senior notes.
Capital Expenditures
10 unchanged sentences
Currently, we have no liabilities recorded for these agreements as of December 31, 2021.
−Removed: Critical Accounting Policies and Estimates
−Removed: Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America.
−Removed: As such, we are required to make certain estimates, judgments and assumptions that management believes are reasonable based upon the information available.
−Removed: 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.
−Removed: 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.
−Removed: We believe that the assumptions and estimates associated with revenue recognition, stock-based compensation, accounts receivable, the valuation of goodwill and intangible assets, income taxes and legal contingencies have the greatest potential impact on our consolidated financial statements.
−Removed: We evaluate these estimates on an ongoing basis.
−Removed: Actual results could differ from those estimates under different assumptions or conditions, and any differences could be material.
−Removed: For further information on all of our significant accounting policies, see Note 1 of the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.
−Removed: Revenue Recognition
−Removed: The majority of our revenue is generated from monthly service revenues and related professional services from the sale of our services.
−Removed: Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
−Removed: We determine revenue recognition through the following steps:
−Removed: • Identification of the contract, or contracts, with a customer;
−Removed: • Identification of the performance obligations in the contract;
−Removed: • Determination of the transaction price;
−Removed: • Allocation of the transaction price to the performance obligations in the contract;
−Removed: • Recognition of revenue when, or as, we satisfy a performance obligation.
−Removed: Total revenue of $366.6 million, $291.6 million, and $249.8 million was recognized during the years ended December 31, 2020, December 31, 2019 and December 31, 2018, respectively.
−Removed: Hosted Services- Business Revenue
−Removed: Hosted Services Business revenue is reported at the amount that reflects the ultimate consideration expected to be received and primarily consist of fees that provide customers access to the Conversational Cloud, our enterprise-class, cloud-based platform.
−Removed: We have determined such access represents a stand-ready service provided continually throughout the contract term.
−Removed: As such, control and satisfaction of this stand-ready performance obligation is deemed to occur over time.
−Removed: We recognize this revenue over time on a ratable basis over the contract term, beginning on the date that access to the Conversational Cloud platform is made available to the customer.
−Removed: The passage of time is deemed to be the most faithful depiction of the transfer of control of the services as the customer simultaneously receives and consumes the benefit provided by our performance.
−Removed: Subscription contracts are generally one year or longer in length, billed, monthly, quarterly or annually in advance.
−Removed: There is no significant variable consideration related to these arrangements.
−Removed: Additionally, for certain of our larger customers, we may provide call center labor through an arrangement with one or more of several qualified vendors.
−Removed: For most of these customers, we pass the fee we incur with the labor provider and its 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.
−Removed: For these Gainshare (formerly “Pay for Performance”) arrangements in accordance with ASC-606, ‘‘Principal Agent Considerations,’’ we act as a principal in a transaction if we control the specified goods or services before they are transferred to the customer.
−Removed: Professional Services Revenues
−Removed: Professional services revenue primarily consists of fees for deployment and optimization services, as well as training delivered on an on-demand basis which is deemed to represent a distinct stand-ready performance obligation.
−Removed: Professional Services Revenues are reported at the amount that reflects the ultimate consideration we expect to receive in exchange for such services.
−Removed: Control for the majority of our Professional Services contracts passes over time to the customer and is recognized ratably over the contracted period, as the passage of time is deemed to be the most faithful depiction of the transfer of control.
−Removed: For certain deployment services, which are not deemed to represent a distinct performance obligation, revenue will be recognized in the same manner as the fee for access to the Conversational Cloud platform, and as such will be recognized on a straight-line basis over the contract term.
−Removed: For services billed on a fixed price basis, revenue is recognized over time based on the proportion performed using time and materials as the measure of progress toward complete satisfaction of the performance obligation.
−Removed: Professional service contracts are generally one year or longer in length, billed, monthly, quarterly or annually in advance.
−Removed: There is no significant variable consideration related to these arrangements.
−Removed: Contracts with Multiple Performance Obligations
−Removed: Some of our contracts with customers contain multiple performance obligations.
−Removed: For these contracts, we account for individual performance obligations separately if they are distinct.
−Removed: The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis.
−Removed: We determine the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the cloud applications sold, and the number and types of users within our contracts.
−Removed: Hosted Services- Consumer Revenue
−Removed: For revenue from our Consumer segment generated from online transactions between Experts and Users, revenue is recognized at an amount net of Expert fees in accordance with ASC 606, “Principal Agent Considerations,” due primarily to the fact that we do not act as a principal in a transaction since we do not control the specified goods or services before they are transferred to the customer.
−Removed: Additionally, we perform as an agent without any risk of loss for collection, and we are not involved in selecting the Expert or establishing the Expert’s fee.
−Removed: We collect a fee from the consumer and retain a portion of the fee, and then remit the balance to the Expert.
−Removed: Revenue from these transactions is recognized at the point in time when the transaction is complete and no significant performance obligations remain.
−Removed: Stock-Based Compensation
−Removed: 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.
−Removed: 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).
−Removed: Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.
−Removed: As of December 31, 2020, there was approximately $17.9 million of total unrecognized compensation cost related to nonvested stock options.
−Removed: That cost is expected to be recognized over a weighted average period of approximately 2.5 years.
−Removed: As of December 31, 2020, there was approximately $66.8 million of total unrecognized compensation cost related to nonvested restricted stock units.
−Removed: That cost is expected to be recognized over a weighted average period of approximately 2.8 years.
−Removed: Accounts Receivable
−Removed: 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.
−Removed: 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.
−Removed: Although our large number of customers limits our concentration of credit risk, if we experience a significant write-off from one of our large customers, it could have a material adverse impact on our consolidated financial statements.
−Removed: No single customer accounted for or exceeded 10% of our total revenue in 2020, 2019 and 2018 .
−Removed: No single customer accounted for or exceeded 10% of our total accounts receivable in 2020 and 2018.
−Removed: Two customers exceeded 10% of our total accounts receivable in 2019.
−Removed: During 2020, we increased our allowance for doubtful accounts from approximately $3.1 million to approximately $5.3 million.
−Removed: A large proportion of receivables are due from larger corporate customers that typically have longer payment cycles.
−Removed: Goodwill represents the excess of the aggregate purchase price over the fair value of net identifiable assets acquired in a business combination.
−Removed: Goodwill is not amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
−Removed: The Company has determined that it operates as two reporting units and has selected September 30 as the date to perform its annual impairment test.
−Removed: In the valuation of goodwill, management must make assumptions regarding estimated future cash flows to be derived from the Company's business.
−Removed: If these estimates or their related assumptions change in the future, the Company may be required to record impairment for these assets.
−Removed: The Company has the option to first perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
−Removed: However, the Company may elect to bypass the qualitative assessment and proceed directly to the quantitative impairment tests.
−Removed: The impairment test involves comparing the fair value of the reporting unit to its carrying value, including goodwill.
−Removed: A goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value.
−Removed: The impairment is limited to the carrying amount of goodwill.
−Removed: No goodwill impairment charges have been recorded for any period presented.
−Removed: Impairment of Long-Lived Assets
−Removed: The carrying amounts of our long-lived assets, including property and equipment, lease right-of-use assets, capitalized internal-use software, costs to obtain customer contracts, and acquired intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful lives are shorter than originally estimated.
−Removed: Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to future undiscounted net cash flows the asset is expected to generate over its remaining life.
−Removed: If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset.
−Removed: If the useful life is shorter than originally estimated, we amortize the remaining carrying value over the new shorter useful life.
−Removed: There was a loss on disposal of approximately $5.1 million in October 2020.
−Removed: The Company recognized accelerated depreciation of fixed assets that were determined to no longer be of future economic benefit to the Company based on the decision to vacate the leased office space.
−Removed: Income taxes are accounted for under the asset and liability method.
−Removed: Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
−Removed: Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
−Removed: In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.
−Removed: The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are expected to become deductible.
−Removed: In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations.
−Removed: We include interest accrued on the underpayment of income taxes in interest expense and penalties, if any, related to unrecognized tax benefits in general and administrative expenses.
−Removed: We recorded a valuation allowance as we considered our cumulative loss in recent years as a significant piece of negative evidence.
−Removed: During the year ended December 31, 2020, there was an increase in the valuation allowance of $6.9 million.
−Removed: Legal Contingencies
−Removed: We are subject to legal proceedings and litigation arising in the ordinary course of business.
−Removed: Periodically, we evaluate the status of each legal matter and assess our potential financial exposure.
−Removed: 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.
−Removed: Significant judgment is required to determine the probability of a loss and whether the amount of the loss is reasonably estimable.
−Removed: The outcome of any proceeding is not determinable in advance.
−Removed: 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.
−Removed: As additional information becomes available, we reassess the potential liability related to the legal proceeding or litigation, and may revise our estimates.
−Removed: Any revisions could have a material effect on our results of operations.
−Removed: See Note 13, Legal Matters, of the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information on our legal proceedings and litigation.
−Removed: Recently Issued Accounting Standards
−Removed: See Note 1 of the Notes to the Consolidated Financial Statements for a full description of recently issued accounting standards.
−Removed: Recently Adopted Accounting Pronouncements
−Removed: See Note 1 of the Notes to the Consolidated Financial Statements for a full description of recently adopted accounting pronouncements.
+Added: Off Balance Sheet Arrangements
+Added: We do not engage in off-balance sheet financing arrangements.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.