Form 10-Q LIVEPERSON INC For: Mar 31

May 10, 2022 5:10 PM EDT

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(Mark One)
For the quarterly period ended March 31, 2022
For the transition period from ____________________ to ____________________

Commission File Number: 000-30141
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)
530 7th Ave, Floor M1
New York, New York
(Address of principal executive offices)(Zip Code)
(212) 609-4200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareLPSNThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated Filer
Non-accelerated FilerSmaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
On May 2, 2022, 74,449,659 shares of the registrant’s common stock were outstanding.

March 31, 2022
Item 1.
as of March 31, 2022 and December 31, 2021
for the Three Months Ended March 31, 2022 and 2021
for the Three Months Ended March 31, 2022 and 2021
for the Three Months Ended March 31, 2022 and 2021
for the Three Months Ended March 31, 2022 and 2021
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


Statements in this Quarterly Report on Form 10-Q about LivePerson, Inc. (“LivePerson”, the “Company”, “we” or “us”) that are not historical facts are forward-looking statements. These forward-looking statements are based on our current expectations, assumptions, estimates and projections about LivePerson and our industry. Our expectations, assumptions, estimates and projections are expressed in good faith, and we believe there is a reasonable basis for them, but we cannot assure you that our expectations, assumptions, estimates and projections will be realized. Examples of forward-looking statements include, but are not limited to, statements regarding future business, future results of operations or financial condition (including based on examinations of historical operating trends), management strategies and the COVID-19 pandemic. Many of these statements are found in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Quarterly Report on Form 10-Q. When used in this Quarterly Report on Form 10-Q, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes” and variations of such words or similar expressions are intended to identify forward-looking statements. However, not all forward-looking statements contain these words. Forward-looking statements are subject to risks and uncertainties that could cause actual future events or results to differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q include those set forth in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2022 in the section entitled Part I, Item 1A. “Risk Factors.” It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations may change prior to the end of each quarter or the year. Although these expectations may change, we are under no obligation to inform you if they do. Our policy is generally to provide our expectations only once per quarter, and not to update that information until the next quarter. We do not undertake any obligation to revise forward-looking statements to reflect future events or circumstances. All forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.


Part I. Financial Information
Item 1. Financial Statements
 March 31,
December 31,
(In thousands)
Current assets:  
Cash and cash equivalents$480,676 $521,846 
Accounts receivable, net of allowances of $7,246 and $6,338 as of March 31, 2022 and December 31, 2021, respectively
108,521 93,804 
Prepaid expenses and other current assets30,114 20,626 
Total current assets619,311 636,276 
Operating lease right of use assets (Note 10)
4,085 1,977 
Property and equipment, net (Note 6)
131,766 124,726 
Contract acquisition costs42,724 40,675 
Intangibles, net (Note 5)
90,182 85,554 
Goodwill (Note 5)
305,426 291,215 
Deferred tax assets5,190 5,034 
Investment in joint venture2,790  
Other assets2,599 1,199 
Total assets$1,204,073 $1,186,656 
Current liabilities:  
Accounts payable$26,059 $16,942 
Accrued expenses and other current liabilities (Note 7)
106,778 104,297 
Deferred revenue (Note 2)
112,323 98,808 
Operating lease liability (Note 10)
4,864 3,380 
Total current liabilities250,024 223,427 
Deferred revenue, net of current portion (Note 2)
188 54 
Convertible senior notes, net (Note 8)
734,586 574,238 
Operating lease liability, net of current portion (Note 10)
2,795 2,733 
Deferred tax liability2,422 2,049 
Other liabilities33,712 34,718 
Total liabilities1,023,727 837,219 
Commitments and contingencies (Note 12)
Stockholders equity:
Preferred stock, $0.001 par value - 5,000,000 shares authorized, none issued
Common stock, $0.001 par value - 200,000,000 shares authorized, 77,062,637 and 74,980,546 shares issued, 74,316,394 and 72,234,303 shares outstanding as of March 31, 2022 and December 31, 2021, respectively
77 75 
Additional paid-in capital719,514 871,788 
Treasury stock - 2,746,243 shares
Accumulated deficit(531,979)(516,859)
Accumulated other comprehensive loss(7,263)(5,564)
Total stockholders’ equity180,346 349,437 
Total liabilities and stockholders equity
$1,204,073 $1,186,656 
See accompanying notes to unaudited condensed consolidated financial statements.

Three Months Ended
March 31,
(In thousands, except share and per share amounts)
Revenue$130,197 $107,891 
Costs and expenses (1) (2)
Cost of revenue (3)
49,567 33,519 
Sales and marketing58,132 36,953 
General and administrative29,735 14,486 
Product development56,072 33,455 
Restructuring costs(23)2,732 
Amortization of purchased intangibles1,841 375 
Total costs and expenses195,324 121,520 
Loss from operations(65,127)(13,629)
Other expense, net
      Interest expense, net(490)(9,129)
Other income, net60 712 
Total other expense, net(430)(8,417)
Loss before benefit from income taxes(65,557)(22,046)
Benefit from income taxes(193)(851)
Net loss$(65,364)$(21,195)
Net loss per share of common stock:
Basic $(0.86)$(0.31)
Diluted $(0.86)$(0.31)
Weighted-average shares used to compute net loss per share:
Basic 75,812,405 67,901,809 
Diluted75,812,405 67,901,809 
(1) Amounts include stock-based compensation expense, as follows:
Cost of revenue $2,131 $1,895 
Sales and marketing 6,649 3,782 
General and administrative 10,438 2,650 
Product development 12,648 6,284 
(2) Amounts include depreciation expense, as follows:
Cost of revenue $2,533 $2,534 
Sales and marketing 552 603 
General and administrative 137 60 
Product development 4,002 3,408 
(3) Amounts include amortization of purchased intangibles and finance leases, as follows:
Cost of revenue $4,416 $1,175 
See accompanying notes to unaudited condensed consolidated financial statements.

Three Months Ended
March 31,
(In thousands)
Net loss$(65,364)$(21,195)
Foreign currency translation adjustment(1,699)(1,746)
Comprehensive loss$(67,063)$(22,941)
    See accompanying notes to unaudited condensed consolidated financial statements.


Common StockTreasury StockAdditional
(In thousands, except share data)
Balance as of December 31, 202174,980,546 $75 (2,746,243)$(3)$871,788 $(516,859)$(5,564)$349,437 
Cumulative adjustment due to adoption of ASU 2020-06— — — — (209,651)50,244 — (159,407)
Common stock issued upon exercise of stock options40,483 — — — 506 — — 506 
Common stock issued upon vesting of restricted stock units (“RSUs”)444,043 — — — — — —  
Stock-based compensation— — — — 20,522 — — 20,522 
Cash awards settled in shares of the Company’s common stock735,519 1 — — 17,298 — — 17,299 
Common stock issued under Employee Stock Purchase Plan82,100 — — — 1,415 — — 1,415 
Issuance of common stock in connection with acquisitions (Note 9)779,946 1 — — 17,636 — — 17,637 
Net loss— — — — — (65,364)— (65,364)
Other comprehensive loss— — — — — — (1,699)(1,699)
Balance as of March 31, 202277,062,637 $77 (2,746,243)$(3)$719,514 $(531,979)$(7,263)$180,346 

Common StockTreasury StockAdditional
(In thousands, except share data)
Balance as of December 31, 202070,264,265 $70 -2704706000000(2,709,830)$(3)-$635,672 $(391,885)$80 $243,934 
Common stock issued upon exercise of stock options209,185 — — — 2,617 — — 2,617 
Common stock issued upon vesting of RSUs454,508 1 — — (1)— —  
Stock-based compensation— — — — 9,225 — — 9,225 
Cash awards settled in shares of the Company’s common stock400,700 — — — 25,925 — — 25,925 
Common stock issued under Employee Stock Purchase Plan22,544 — — — 1,257 — — 1,257 
Net loss— — — — — (21,195)— (21,195)
Other comprehensive loss— — — — — — (1,746)(1,746)
Balance as of March 31, 202171,351,202 $71 (2,709,830)$(3)$674,695 $(413,080)$(1,666)$260,017 
See accompanying notes to unaudited condensed consolidated financial statements.

Three Months Ended
March 31,
(In thousands)
Net loss$(65,364)$(21,195)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:  
Stock-based compensation expense31,866 14,611 
Depreciation7,224 6,605 
Amortization of purchased intangibles and finance leases5,316 1,550 
Amortization of debt issuance costs941 609 
Accretion of debt discount on convertible senior notes 8,118 
Allowance for credit losses1,276 801 
Deferred income taxes218 (1,595)
Changes in operating assets and liabilities: 
Accounts receivable(16,331)(13,658)
Prepaid expenses and other current assets(9,344)(5,822)
Contract acquisition costs noncurrent(2,793)(436)
Other assets(159)47 
Accounts payable8,023 (1,920)
Accrued expenses and other current liabilities3,222 17,208 
Deferred revenue13,527 21,642 
Operating lease liabilities(485)(1,441)
Other liabilities(9)105 
Net cash (used in) provided by operating activities(22,872)25,229 
Purchases of property and equipment, including capitalized software(13,135)(10,630)
Investment in joint venture(2,790) 
Payments for acquisition, net of cash acquired(3,236) 
Payments for intangible assets(738)(807)
Net cash used in investing activities(19,899)(11,437)
Principal payments for financing leases(920)(859)
Proceeds from issuance of common stock in connection with the exercise of options and ESPP1,921 3,874 
Net cash provided by financing activities1,001 3,015 
Effect of foreign exchange rate changes on cash and cash equivalents600 (2,734)
Net (decrease) increase in cash, cash equivalents, and restricted cash(41,170)14,073 
Cash, cash equivalents, and restricted cash - beginning of year523,532 654,152 
Cash, cash equivalents, and restricted cash - end of year$482,362 $668,225 
Reconciliation of cash, cash equivalents, and restricted cash to condensed consolidated balance sheets
Cash and cash equivalents$480,676 $668,225 
Restricted cash in prepaid expenses and other current assets1,686  
Total cash, cash equivalents, and restricted cash$482,362 $668,225 

Three Months Ended
March 31,
(In thousands)
Supplemental disclosure of other cash flow information:
Cash paid for income taxes$1,259 $329 
Cash paid for interest928 957 
Supplemental disclosure of non-cash investing and financing activities:
Increase in convertible senior notes, net upon adoption of ASU 2020-06 (Note 1)$159,407 $ 
Purchase of property and equipment recorded in accounts payable1,060 1,530 
Issuance of shares of common stock to settle cash awards17,298 25,925 
Right of use assets obtained in exchange for operating lease liabilities2,678  
Fair value of contingent earn-out in connection with the acquisition of AdvantageTec Inc. recorded in accrued expenses 132 
Issuance of 776,825 shares of common stock in connection with the WildHealth transaction in February 2022
See accompanying notes to unaudited condensed consolidated financial statements.


Note 1. Description of Business and Basis of Presentation

LivePerson, Inc. (“LivePerson”, the “Company”, “we”, “our” or “us”) is a leading Conversational Artificial Intelligence (“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. 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. Our technology enables consumers to connect with businesses through these same preferred conversational interfaces, including Facebook Messenger, short message service (“SMS”), WhatsApp, Apple Business Chat, Google Rich Business Messenger and Alexa. 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. These AI and human-assisted conversational experiences constitute the Conversational Space, within which LivePerson has strategically developed one of the industry’s largest ecosystems of messaging endpoints and use cases.

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. 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. 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. 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.

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, co-browsing and a sophisticated proactive targeting engine. 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. More than 40 APIs and software development kits are available on the Conversational Cloud.

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. 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. 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. By seamlessly integrating messaging with our proprietary Conversational AI, as well as third-party bots, the Conversational Cloud offers brands a comprehensive approach to scaling automations across their millions of customer conversations.

LivePerson’s consumer services offering is an online marketplace that connects independent service providers (“Experts”) who provide information and knowledge for a fee via mobile and online messaging with individual consumers (“Users”). 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.

LivePerson was incorporated in the State of Delaware in November 1995 and the LivePerson service was introduced in November 1998. The Company completed an initial public offering in April 2000 and is currently traded on the Nasdaq Global Select Market (“Nasdaq”) and the Tel Aviv Stock Exchange (“TASE”). LivePerson is headquartered in New York City. In light of the COVID-19 pandemic and the company’s strong performance working remotely, LivePerson has adopted an “employee-centric” workforce model that does not rely on traditional offices. 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.


Basis of Presentation

The accompanying condensed consolidated financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the condensed consolidated financial position of LivePerson as of March 31, 2022, and the condensed consolidated results of operations, comprehensive loss, and cash flows for the interim periods ended March 31, 2022 and 2021. The financial data and other information disclosed in these notes to the condensed consolidated financial statements related to these periods are unaudited. The results of operations for any interim period are not necessarily indicative of the results of operations for any other future interim period or for a full fiscal year. The consolidated balance sheet as of December 31, 2021 has been derived from audited consolidated financial statements at that date.

Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2022.

Principles of Consolidation

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

Equity Method Investments

The Company utilizes the equity method to account for investments when it possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when an investor possesses more than 20.0% of the voting interests of the investee, and conversely, the ability to exercise significant influence is presumed not to exist when an investor possesses 20% or less of the voting interests of the investee. These presumptions may be overcome based on specific facts and circumstances that demonstrate an ability to exercise significant influence is restricted or demonstrate an ability to exercise significant influence notwithstanding a smaller voting interest, such as with our 19.2% equity method investment in Claire Holdings, Inc. (“Claire”), due to the Company's seat on the entity’s board of directors which provides the Company the ability to exert significant influence. In applying the equity method, the Company records the investment at cost and subsequently increases or decreases the carrying amount of the investment by its proportionate share of the net earnings or losses through earnings. The Company records dividends or other equity distributions as reductions in the carrying value of the investment. The Company assesses the carrying value of equity method investments on a periodic basis to see if there has been a decline in carrying value that is not temporary. When deciding whether a decline in carrying value is more than temporary, a number of factors are considered, including the investee’s financial condition and business prospects, as well as the Company’s investment intentions.

Variable Interest Entities

The condensed consolidated financial statements include the financial statements of LivePerson, its wholly owned subsidiaries, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. The Company consolidates entities in which it has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation.

The Company evaluates whether an entity in which it has a variable interest is considered a variable interest entity. VIEs are generally entities that have either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest (i.e., ability to make significant decisions through voting rights and a right to receive the expected residual returns of the entity or an obligation to absorb the expected losses of the entity).

Under the provisions of Accounting Standards Codification (“ASC”) 810, “Consolidation”, an entity consolidates a VIE if it is determined to be the primary beneficiary of the VIE. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and (b) the obligation to absorb losses or


the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company periodically reassesses whether it is the primary beneficiary of a VIE.

See Note 18 – Variable Interest Entity for the Company’s assessment of VIEs.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Significant items subject to such estimates and assumptions include:
revenue recognition;
stock-based compensation;
accounts receivable;
valuation of goodwill;
valuation of intangible assets;
income taxes; and
legal contingencies.

Many of the Company’s estimates require increased judgment due to the significant volatility, uncertainty and economic disruption of the COVID-19 pandemic. The Company continues to monitor the effects of the COVID-19 pandemic, and its estimates and judgments may change materially as new events occur or additional information becomes available.

As of the date of issuance of the financial statements, the Company is not aware of any material specific events or circumstances that would require it to update its estimates, judgments, or to revise the carrying values of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s condensed consolidated financial statements.

Foreign Currency Translation

The Company’s operations are conducted in various countries around the world and the financial statements of its foreign subsidiaries are reported in the applicable foreign currencies (functional currencies). Financial information is translated from the applicable functional currency to the U.S. dollar (the reporting currency) for inclusion in the Company’s condensed consolidated financial statements. Income, expenses, and cash flows are translated at weighted average exchange rates prevailing during the fiscal period, and assets and liabilities are translated at fiscal period-end exchange rates. Resulting translation adjustments are included as a component of accumulated other comprehensive loss in stockholders’ equity. Foreign exchange transaction gain or losses are included in other expense, net in the accompanying condensed consolidated statements of operations.

Recently Adopted Accounting Pronouncements

Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06 which simplifies the accounting for convertible instruments by eliminating existing accounting models that require separation of a cash conversion or beneficial conversion feature from the host contract. Accordingly, a convertible debt instrument will be accounted as a single liability measured at its amortized cost and a convertible preferred stock will be accounted as a single equity instrument measured at its historical cost, as long as no other embedded features require bifurcation as derivatives and the convertible debt was not issued at a substantial premium. The ASU also simplifies the derivative scope exception for accounting for contracts in an entity’s own equity by:
removing certain conditions required to meet the settlement criterion;


clarifying that instruments that are not indexed to the issuer’s own stock must be remeasured at fair value through earnings at each reporting period; and
clarifying the scope of reassessment guidance and disclosure requirements in Subtopic 815-40.

The ASU also makes targeted improvements to the disclosure requirements for convertible instruments and earnings per share guidance.

For SEC filers, excluding smaller reporting companies, the ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The ASU specifies that the guidance should be adopted as of the beginning of the annual fiscal year. In connection with the adoption of ASU 2020-06, we recognized a $50.2 million decrease of accumulated deficit, a $209.7 million decrease of additional paid-in capital, and an $159.5 million increase of convertible senior notes, net. See Note 8 – Convertible Senior Notes and Capped Call Transactions for a full description of the convertible senior notes.

With the exception of the new standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the quarter ended March 31, 2022, that are of significance or potential significance to the Company.

Note 2. Revenue Recognition 

The majority of the Company’s revenue is generated from hosted service revenues, which is inclusive of its platform usage pricing model, and related professional services from the sale of its services. Revenues are recognized when control of these services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those services. No single customer accounted for 10% or more of its total revenue for the three months ended March 31, 2022.

Remaining Performance Obligation

As of March 31, 2022, 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 $448.0 million. Approximately 91% of the Company’s remaining performance obligations is expected to be recognized during the next 24 months, with the balance recognized thereafter. 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.

Deferred Revenues

The Company records deferred revenues when cash payments are received or due in advance of its performance. The increase in the deferred revenue balance as of March 31, 2022 is primarily driven by cash payments received or due in advance of its performance obligations, partially offset by $55.4 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2021.

The following table presents deferred revenue by revenue source:
Deferred Revenue
March 31,
December 31,
(In thousands)
Hosted services – Business$104,661 $94,107 
Hosted services – Consumer861 870 
Professional services – Business6,801 3,831 
Total deferred revenue - short term$112,323 $98,808 
Professional services – Business$188 $54 
Total deferred revenue - long term$188 $54 



Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue source:
Three Months Ended
March 31,
(In thousands)
Hosted services – Business$106,324 $83,640 
Hosted services – Consumer9,122 9,011 
Professional services – Business14,751 15,240 
Total revenue$130,197 $107,891 

Revenue by Geographic Location

The following table presents the Company’s revenues attributable to domestic and foreign operations for the periods presented:
Three Months Ended
March 31,
(In thousands)
United States$87,137 $68,782 
Other Americas (1)
5,039 3,913 
Total Americas92,176 72,695 
EMEA (2) (4)
23,820 21,760 
APAC (3)
14,201 13,436 
Total revenue$130,197 $107,891 
(1)Canada, Latin America and South America
(2)Europe, the Middle East and Africa (“EMEA”)
(3)Asia Pacific (“APAC”)
(4)Includes revenues from the United Kingdom of $14.7 million and $13.3 million for the three months ended March 31, 2022 and 2021, respectively, and from the Netherlands of $1.3 million for each of the three months ended March 31, 2022 and 2021.

Information about Contract Balances

Amounts collected in advance of services being provided are accounted for as deferred revenue. Nearly all of the Company’s deferred revenue balance is related to Hosted services - Business revenue.

In some arrangements, the Company allows customers to pay for access to the Conversational Cloud over the term of the software license. The Company refers to these as subscription transactions. Amounts recognized as revenue in excess of amounts billed are recorded as unbilled receivables. Unbilled receivables, anticipated to be invoiced in the next twelve months, are included in accounts receivable on the condensed consolidated balance sheet. Contract acquisition costs represent prepaid sales commissions. The opening and closing balances of the Company’s accounts receivable, unbilled receivables, and deferred revenues are as follows:
Accounts ReceivableUnbilled ReceivableContract Acquisition
Deferred Revenue (Current)Deferred Revenue
(In thousands)
Opening balance as of December 31, 2021$69,259 $24,545 $40,675 $98,808 $54 
Increase, net13,464 1,253 2,049 13,515 134 
Ending balance as of March 31, 2022$82,723 $25,798 $42,724 $112,323 $188 


Accounts Receivable, Net

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience. The Company reviews its allowance for doubtful accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Accounts receivable are written off against the allowance for uncollectible accounts when the Company determines amounts are no longer collectible.
Allowance for Doubtful Accounts
(In thousands)
Allowance for doubtful accounts :
Balance at beginning of the year$6,338 
Additions charged to costs and expenses1,276 
Balance as of March 31, 2022$7,246 

Note 3. Net Loss Per Share
Basic earnings per share (“EPS”) excludes dilution for common stock equivalents and is computed by dividing net income or loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. All options, warrants, or other potentially dilutive instruments issued for nominal consideration are required to be included in the calculation of basic and diluted net income attributable to common stockholders. Diluted EPS is calculated using the “if-converted” method. The “if-converted” method is only assumed in periods where such application would be dilutive. In applying the “if-converted” method for diluted net income per share, the Company would assume conversion of the 2024 Notes at a ratio of 25.9182 shares of its common stock per $1,000 principal amount of the 2024 Notes. The Company would assume conversion of the 2026 Notes at a ratio of 13.2933 shares of its common stock per $1,000 principal amount of the 2026 Notes. Assumed converted shares of our common stock are weighted for the period the Notes were outstanding. The shares of common stock underlying the conversion option of the Notes were not included in the calculation of diluted income per share for the three months ended March 31, 2022.

See Note 8 – Convertible Senior Notes and Capped Call Transactions for a full description of the Notes.

A reconciliation of shares used in calculating basic and diluted net loss per share follows:
Three Months Ended
March 31,
Net loss (in thousands)$(65,364)$(21,195)
Weighted average number of shares outstanding, basic and diluted75,812,40567,901,809
Net loss per share, basic and diluted$(0.86)$(0.31)

The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows:
As of March 31,
Shares subject to outstanding common stock options and employee stock purchase plan5,027,605 4,172,765 
Restricted stock units4,292,153 2,530,542 
Conversion option of the 2024 Notes5,961,186 5,961,186 
Conversion option of the 2026 Notes6,879,283 6,879,283 
22,160,227 19,543,776 



Note 4. Segment Information

The Company is organized into two operating segments for purposes of making operating decisions and assessing performance. The Business segment enables brands to leverage the Conversational Cloud’s sophisticated intelligence engine to connect with consumers through an integrated suite of mobile and online business messaging technologies. The Consumer segment facilitates online transactions between Experts and Users seeking information and knowledge for a fee via mobile and online messaging. It includes WildHealth, Inc. (“WildHealth”), a precision medicine company. Both segments currently generate their revenue primarily in the United States. The chief operating decision maker, who is the chief executive officer, evaluates performance, makes operating decisions, and allocates resources based on the operating income of each segment. The reporting segments follow the same accounting polices used in the preparation of our condensed consolidated financial statements which are described in Note 1 –Description of Business and Basis of Presentation. The Company allocates cost of revenue, sales and marketing, and amortization of purchased intangibles to the segments, but it does not allocate product development expenses, general and administrative expenses, restructuring costs, or income tax expense because management does not use this information to measure performance of the operating segments. There are currently no inter-segment sales.

Summarized financial information by segment for the three months ended March 31, 2022, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision maker, follows:
(In thousands)
Hosted services – Business$106,324 $ $ $106,324 
Hosted services – Consumer 9,122  9,122 
Professional services – Business14,751   14,751 
Total revenue121,075 9,122  130,197 
Cost of revenue48,221 1,346  49,567 
Sales and marketing52,283 5,849  58,132 
Amortization of purchased intangibles1,841   1,841 
Unallocated corporate expenses  85,784 85,784 
Operating income (loss)$18,730 $1,927 $(85,784)$(65,127)

Summarized financial information by segment for the three months ended March 31, 2021, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision maker, follows:
(In thousands)
Hosted services – Business$83,640 $ $ $83,640 
Hosted services – Consumer 9,011  9,011 
Professional services – Business15,240   15,240 
Total revenue98,880 9,011  107,891 
Cost of revenue31,610 1,909  33,519 
Sales and marketing30,203 6,750  36,953 
Amortization of purchased intangibles375   375 
Unallocated corporate expenses  50,672 50,672 
Operating income (loss) $36,692 $352 $(50,672)$(13,629)



Geographic Information

The Company is domiciled in the United States and has international operations around the globe. The following table presents the Company’s long-lived assets by geographic region for the periods presented:
March 31,December 31,
(In thousands)
United States$429,761 $444,318 
Germany96,885 52,342 
Israel21,430 20,754 
Australia13,094 12,771 
Netherlands6,948 4,566 
Other (1)
16,644 15,629 
Total long-lived assets$584,762 $550,380 
(1)United Kingdom, Japan, France, Italy, Spain, Canada, and Singapore

Note 5. Goodwill and Intangible Assets


The changes in the carrying amount of goodwill for the three months ended March 31, 2022 are as follows:
(In thousands)
Balance as of December 31, 2021$283,191 $8,024 $291,215 
Adjustments to goodwill:
Acquisitions 15,291 15,291 
Foreign exchange adjustment(1,080) (1,080)
Balance as of March 31, 2022$282,111 $23,315 $305,426 

Intangible Assets

Intangible assets are summarized as follows:
March 31, 2022
Net Carrying AmountWeighted
(In thousands)
Amortizing intangible assets:
Technology$97,623 $(34,351)$63,272 5.1 years
Customer relationships32,097 (15,723)16,374 10.0 years
Patents8,884 (1,196)7,688 12.8 years
Trademarks1,439 (207)1,232 5.0 years
Trade names1,045 (103)942 2.8 years
Other914 (240)674 4.1 years
Total$142,002 $(51,820)$90,182 



December 31, 2021
Net Carrying AmountWeighted
(In thousands)
Amortizing intangible assets:
Technology$90,626 $(30,757)$59,869 5.1 years
Customer relationships32,162 (15,164)16,998 10.0 years
Patents7,988 (1,137)6,851 11.8 years
Trademarks1,474 (135)1,339 5.0 years
Trade names460 (43)417 2.1 years
Other314 (234)80