Form 424B3 LiveVox Holdings, Inc.

August 2, 2021 6:10 AM EDT

Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.
Table of Contents

Filed Pursuant to Rule 424(b)(3)
Registration No. 333-257969

PROSPECTUS   

 

 

LOGO

Up to 85,795,425 Shares of Class A Common Stock

Up to 13,333,333 Shares of Class A Common Stock Issuable Upon Exercise of Warrants

Up to 833,333 Warrants to Purchase Class A Common Stock

This prospectus relates to the issuance by us of an aggregate of up to 13,333,333 shares of our Class A common stock, $0.0001 par value per share (the “Common Stock”), which consists of (i) 833,333 shares of common stock that are issuable upon the exercise of warrants (the “Forward Purchase Warrants”) issued pursuant to the forward purchase agreement, dated January 13, 2021, by and among the Company and Crescent, and the transferee joinders thereto, by and between the Company and third party transferees (the “Forward Purchase”) and (ii) up to 12,500,000 shares of common stock that are issuable upon the exercise of public warrants (the “Public Warrants” and, together with the Forward Purchase Warrants, the “Warrants”). We will receive the proceeds from the cash exercise of any Warrants.

This prospectus also relates to the offer and sale from time to time by the selling shareholders named in this prospectus or their permitted transferees (the “Selling Shareholders”) of (i) up to 85,795,425 shares of common stock consisting of (a) up to 2,500,000 shares of Common Stock (the “Forward Purchase Shares”) issued in the Forward Purchase, (b) up to 7,500,000 shares of Common Stock (the “PIPE Shares”) issued on June 18, 2021 in a private placement pursuant to subscription agreements, dated January 13, 2021, (c) up to 74,962,092 additional shares of Common Stock pursuant to the Amended and Restated Registration Rights Agreement, dated June 18, 2021, among us and the Selling Shareholders, granting such holders registration rights with respect to such shares, and (d) up to 833,333 shares of Common Stock underlying the Forward Purchase Warrants and (ii) up to 833,333 Forward Purchase Warrants. We will not receive any proceeds from the sale of shares of Common Stock or Warrants by the Selling Shareholders pursuant to this prospectus.

The Selling Shareholders may offer, sell or distribute all or a portion of the securities hereby registered publicly or through private transactions at prevailing market prices or at negotiated prices. We will not receive any of the proceeds from such sales of the shares of Common Stock or Warrants, except with respect to amounts received by us upon exercise of the Warrants. We will bear all costs, expenses and fees in connection with the registration of these securities, including with regard to compliance with state securities or “blue sky” laws. Additional information on the Selling Shareholders, and the times and manner in which they may offer and sell the securities under this prospectus, is provided under “Selling Shareholders” and “Plan of Distribution” in this prospectus.

Our Common Stock and Public Warrants are listed on The Nasdaq Global Select Market (“Nasdaq”) under the symbols “LVOX” and “LVOXW,” respectively. On July 30, 2021, the last reported sales price of our Common Stock was $7.68 per share and the last reported sales price of our Public Warrants was $1.50 per warrant.

We are an “emerging growth company,” as that term is defined under the federal securities laws and, as such, are subject to certain reduced public company reporting requirements.

Investing in our securities involves risks that are described in the “Risk Factors ” section beginning on page 21 of this prospectus and in any applicable prospectus supplement.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of the securities to be issued under this prospectus or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is August 2, 2021.


Table of Contents

TABLE OF CONTENTS

 

     Page  

FREQUENTLY USED TERMS

     iii  

ABOUT THIS PROSPECTUS

     vi  

PROSPECTUS SUMMARY

     1  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     20  

RISK FACTORS

     21  

USE OF PROCEEDS

     61  

DIVIDEND POLICY

     62  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     63  

BUSINESS COMBINATION

     74  

BUSINESS

     77  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     92  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     110  

MANAGEMENT

     113  

EXECUTIVE COMPENSATION

     118  

DESCRIPTION OF SECURITIES

     126  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     136  

SELLING SHAREHOLDERS

     138  

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     141  

PLAN OF DISTRIBUTION

     145  

LEGAL MATTERS

     149  

EXPERTS

     150  

WHERE YOU CAN FIND MORE INFORMATION

     152  

INDEX TO FINANCIAL STATEMENTS

     F-1  

 

i


Table of Contents

MARKET AND INDUSTRY DATA AND FORECASTS

Unless otherwise indicated, information contained in this prospectus concerning LiveVox’s industry, its business and the markets in which it operates is based on information from independent industry or research organizations, other industry publications, surveys and forecasts, and LiveVox management estimates. LiveVox management estimates are derived from publicly available information released by independent industry analysts and other third-party sources, as well as data from LiveVox’s internal research and tracking mechanisms, and are based on assumptions made by LiveVox upon reviewing such data and LiveVox’s knowledge of its industry and markets, which we and LiveVox believe to be reasonable. We are responsible for all of the disclosure in this prospectus and while we believe the data from the sources described above to be accurate and complete, neither we nor LiveVox have independently verified data from these sources or obtained third-party verification of market share data and this information may not be reliable. This information generally involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such information, projections or estimates. In addition, customer preferences can and do change. Industry publications and other reports LiveVox has obtained from independent parties generally state that the data contained in these publications or other reports have been obtained in good faith or from sources considered to be reliable, but they do not guarantee the accuracy or completeness of such data. References herein to LiveVox being a leader in a market or service category refers to LiveVox’s belief that it has a leading market share position in each specified market, unless the context otherwise requires. In addition, the discussion herein regarding LiveVox’s various markets is based on how LiveVox defines the markets for its products and services, which products may be either part of larger overall markets or markets that include other types of products.

Assumptions and estimates of our and LiveVox’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors — Risks Related to Our Business and Industry.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Cautionary Note Regarding Forward-Looking Statements.

TRADEMARKS, SERVICE MARKS AND TRADE NAMES

This prospectus contains some of LiveVox’s or its subsidiaries’ trademarks, service marks and trade names, including, among others, LiveVox and SpeechIQ and other names of certain of LiveVox’s products. Each one of these trademarks, service marks or trade names is either (1) a registered trademark of LiveVox or one of its subsidiaries, (2) a trademark for which LiveVox or one of its subsidiaries has a pending application, or (3) a trade name or service mark for which LiveVox or one of its subsidiaries claims common law rights. All other trademarks, trade names or service marks of any other company appearing in this prospectus belong to their respective owners. The use or display of other parties’ trademarks, service marks or trade names is not intended to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us or LiveVox by, these other parties.

Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus are presented without the TM, SM and ® symbols, but such references are not intended to indicate, in any way, that we, LiveVox or the applicable licensors will not assert, to the fullest extent under applicable law, our, LiveVox’s or the applicable licensors’ respective rights to these trademarks, service marks and trade names.

 

ii


Table of Contents

FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, in this prospectus:

AI” means artificial intelligence.

Amended and Restated Bylaws” means the Amended and Restated Bylaws of the Company.

Amended and Restated Registration Rights Agreement” means the Amended and Restated Registration Rights Agreement entered into at the closing of the Business Combination by the Company, Ms. Briscoe and Messrs. Gauthier and Turner, the SPAC Sponsor and the LiveVox Stockholder.

Board” or “Board of Directors” means the board of directors of the Company.

Business Combination” means the transactions contemplated by the Merger Agreement, which included: (i) the merger of First Merger Sub with and into LiveVox, with LiveVox continuing as the surviving corporation and becoming a direct, wholly owned subsidiary of the Company as a consequence; and (ii) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of the Surviving Corporation with and into Second Merger Sub with Second Merger Sub continuing as the surviving entity.

CCaaS” means cloud-hosted Contact Center as a Service.

CCPA” means the California Consumer Privacy Act of 2018.

“Credit Agreement” means the Credit Agreement, dated as of November 7, 2016, by and among LiveVox, certain of its subsidiaries, as guarantors, the lenders party thereto and PNC Bank, National Association as administrative agent, as amended.

Code” means the Internal Revenue Code of 1986, as amended.

Common Stock” means the shares of Class A common stock, par value $0.0001 per share, of the Company.

Company,” “we,” “us” and “our” mean LiveVox Holdings, Inc., a Delaware corporation.

Crescent” means Crescent Capital Group Holdings LP, a Delaware limited partnership and an affiliate of the SPAC Sponsor.

CRM” means customer relationship management, a system that centralizes and standardizes key customer interactions and data into a single database, creating unified customer profiles with insight across the entire customer journey.

DGCL” means the General Corporation Law of the State of Delaware.

Earn-Out Shares” means the 5,000,000 shares of Common Stock issued to the LiveVox Stockholder and held in an escrow account, subject to release to the LiveVox Stockholder only if the price of Common Stock trading on Nasdaq or another national securities exceeds certain thresholds during the seven-year period following the closing of the Business Combination, any Earn-Out Shares not released during such period will be forfeited and canceled for no consideration.

Exchange Act” means the Securities Exchange Act of 1934, as amended.

FCC” means the U.S. Federal Communications Commission.

First Merger” means the merger of First Merger Sub with and into LiveVox, with LiveVox continuing as the surviving corporation and becoming a direct, wholly owned subsidiary of the Company.

 

iii


Table of Contents

First Merger Sub” means Function Acquisition I Corp, a Delaware corporation and a direct, wholly owned subsidiary of the Company.

Forward Purchase Agreement” means the Forward Purchase Agreement, dated as of January 13, 2021, by and between the Company and Crescent, pursuant to which Crescent has committed to purchase, subject to the terms and conditions set forth in the Forward Purchase Agreement, including a lock-up period that restricts the transfer of securities issued pursuant to the Forward Purchase Agreement and registration rights granted thereto, an aggregate of 2,500,000 shares of Common Stock plus 833,333 Warrants for an aggregate purchase price of $25,000,000 in cash in a private placement that will close immediately prior to the Business Combination, which such commitment Crescent may assign, in whole or in part, to certain transferees, including, but not limited to, its current or prospective limited partners.

Forward Purchasers” means Crescent and any third-party transferees to which Crescent has assigned or may assign, in whole or in part, its commitment under the Forward Purchase Agreement to purchase 2,500,000 shares of Common Stock plus 833,333 Warrants for an aggregate purchase price of $25,000,000 in cash in a private placement that will close immediately prior to the Business Combination, such possible transferees, including, but not limited to, Crescent’s current or prospective limited partners.

FTC” means the U.S. Federal Trade Commission.

U.S. GAAP” means U.S. generally accepted accounting principles.

GDPR” means the General Data Protection Regulation.

Golden Gate Capital” means Golden Gate Capital Opportunity Fund, L.P., Golden Gate Capital Opportunity Fund-A, L.P., GGCOF Third-Party Co-Invest, L.P., GGCOF Executive Co-Invest, L.P., GGCOF IRA Co-Invest, L.P., GGC Administration, L.P and affiliates thereof.

Incentive Plan” means the LiveVox 2021 Equity Incentive Plan.

IPO” means the Company’s initial public offering, consummated on March 12, 2019, through the sale of 25,000,000 Units at $10.00 per Unit.

LiveVox” means LiveVox Holdings, Inc., a Delaware corporation.

LiveVox Stockholder” or “LiveVox TopCo” means LiveVox TopCo, LLC, a Delaware limited liability company and the sole stockholder of LiveVox Common Stock and preferred stock as of immediately prior to the effective time of the First Merger.

Lock-Up Shares” means the total of 2,743,750 shares of Common Stock held by the SPAC Sponsor and certain of our independent directors immediately following the closing of the Business Combination upon the automatic conversion of shares of Class F common stock of the Company, par value $0.0001 per share, which will be placed in an escrow account to be subject to release only if the price of Common Stock trading on Nasdaq or another national securities exceeds certain thresholds during the seven-year period following the closing of the Business Combination. Any of the Lock-Up Shares not released during such period will be forfeited and canceled for no consideration.

Merger Agreement” means the Agreement and Plan of Merger, dated as of January 13, 2021, by and among the Company, First Merger Sub, Second Merger Sub, LiveVox and the Stockholder Representative, solely in its capacity as the representative, agent and attorney-in-fact of the stockholders of LiveVox thereunder.

Mergers” means the First Merger and the Second Merger, together.

Nasdaq” means The Nasdaq Global Select Market.

 

iv


Table of Contents

OBIP” means the Option-Based Incentive Plan established by LiveVox in 2014.

PIPE Investors” means the investors who are parties to Subscription Agreements, pursuant to which such investors have collectively subscribed for 7,500,000 shares of Common Stock for an aggregate purchase price of

$75,000,000 in cash in private placements closed immediately prior to the Business Combination.

PIPE Shares” means an aggregate of 7,500,000 shares of Common Stock issued to the PIPE Investors.

Public Warrants” means the 12,500,000 Warrants that were issued as part of our Units in our IPO, each of which is exercisable for one share of Common Stock, in accordance with its terms.

SaaS” means software as a service.

SEC” means the United States Securities and Exchange Commission.

Second Amended and Restated Certificate of Incorporation” means the Second Amended and Restated Certificate of Incorporation of the Company.

Second Merger” means the merger of the Surviving Corporation with and into Second Merger Sub with Second Merger Sub continuing as the surviving entity as part of the Business Combination.

Second Merger Sub” means Function Acquisition II LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of the Company.

Securities Act” means the Securities Act of 1933, as amended.

SPAC Sponsor” means CFI Sponsor LLC, a Delaware limited liability company.

Stockholder Representative” means GGC Services Holdco, Inc., a Delaware corporation, solely in its capacity as the representative, agent and attorney-in-fact of the LiveVox Stockholder under the Merger Agreement.

Subscription Agreements” means, collectively, those certain subscription agreements entered into on January 13, 2021, between the Company and the PIPE Investors.

Surviving Corporation” means the surviving corporation resulting from the First Merger.

Transfer Agent” means Continental Stock Transfer & Trust Company as the Company’s transfer agent.

Units” mean units of the Company, each consisting of one share of Common Stock and one-half of one

Warrant.

VCIP” means the Value Creation Incentive Plan established by LiveVox in 2014.

Voice products” means the voice portion of omnichannel and AI.

Warrant Agent” means Continental Stock Transfer & Trust Company as the Company’s warrant agent.

Warrants” means the Forward Purchase Warrants and the Public Warrants.

WFO” means workforce optimization, a suite of tools and analytics designed to improve contact center operations, productivity, compliance, and overall customer satisfaction.

 

v


Table of Contents

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”) using the “shelf” registration process. Under this shelf registration process, the Selling Shareholders may, from time to time, sell the securities offered by them described in this prospectus. We will not receive any proceeds from the sale by such Selling Shareholders of the securities offered by them described in this prospectus. This prospectus also relates to the issuance by us of the shares of Common Stock issuable upon the exercise of any Warrants. We will receive proceeds from any exercise of the Warrants for cash.

Neither we nor the selling shareholders have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or any applicable prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to which we have referred you. Neither we nor the selling shareholders take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither we nor the selling shareholders will make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.

We may also provide a prospectus supplement or post-effective amendment to the registration statement to add information to, or update or change information contained in, this prospectus. You should read both this prospectus and any applicable prospectus supplement or post-effective amendment to the registration statement together with the additional information to which we refer you in the sections of this prospectus entitled “Where You Can Find More Information.”

 

vi


Table of Contents

PROSPECTUS SUMMARY

This summary highlights selected information from this prospectus and does not contain all of the information that is important to you in making an investment decision. This summary is qualified in its entirety by the more detailed information included elsewhere in this prospectus. Before making your investment decision with respect to our securities, you should carefully read this entire prospectus, including the information under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Financial Statements and Supplementary Data” and the financial statements included elsewhere in this prospectus.

Company Overview

LiveVox’s mission is to enable next-generation cloud contact center experiences. LiveVox offers cloud- hosted Contact Center as a Service (or CCaaS) platform for business processing outsourcing (BPO) organizations, enterprises, and collections agencies. Its offerings include omnichannel and artificial intelligence (AI), customer relationship management (CRM) and workforce optimization (WFO). LiveVox’s platform provides customers with a scalable, cloud-based architecture and preintegrated AI capabilities to support enterprise-grade deployments. Additionally, LiveVox’s platform features a native CRM which unifies disparate, department-level systems of record to present contact center agents with a single view of its customers. LiveVox has built a differentiated approach to the contact center software market and is complemented by an attractive financial model. Key highlights of LiveVox’s business and market opportunity include:

 

   

Large and growing CCaaS market opportunity: The contact center market is in the early stages of a shift to cloud-based solutions and LiveVox estimates that the vast majority of call center agents are not using cloud-based solutions today. Various trends are driving this transition, including digital transformation, the automation of manual contact center labor, and the need for AI-enabled analytics to support omnichannel workflows and agents. LiveVox estimates this market to be approximately $27 billion for 2020, of which approximately $5 billion is comprised of cloud-based solutions. LiveVox and other industry sources estimate the total spend to reach approximately $83 billion by 2030. As enterprises continue to execute on their digital transformation strategies, LiveVox is well positioned to capture a meaningful amount of this growth as it increases its investment in sales and marketing to educate more potential customers on its platform.

 

   

Differentiated product: LiveVox offers a cloud-based, enterprise-focused contact center solution. The LiveVox platform consists of innovative cloud-based AI and omnichannel offerings, anchored by its native CRM solution. LiveVox’s products are designed to enable customers to remove legacy technology barriers and accelerate adoption of cloud-based solutions, regardless of digital transformation journey status. LiveVox’s platform is configured with features and functionalities as well as compliance standards and capabilities, and integrations with many existing third-party solutions, providing customers with a simple and scalable implementation process. LiveVox believes that its integrated offering accelerates the adoption of cloud-based contact center solutions, eliminates data silos, and allows its users to maximize engagement with their customers and create differentiated end user experiences. LiveVox believes that it is currently the only company to offer a product that integrates Omnichannel, Contact Center, CRM, WFO and AI capabilities in a single offering.

 

   

Integration: LiveVox’s products integrate AI and omnichannel capabilities under one platform, alongside CRM and WFO functionalities, providing customers with a single platform to support their contact center capabilities while providing consistent platform-wide analysis and reporting.

 

   

Approach to CRM and data: LiveVox’s products unify disparate, department-level systems of record to present a single view to contact center agents, eliminate data silos that exist between


 

1


Table of Contents
 

disparate and disconnected solutions, provide great customer experiences, and lower costs for its customers. Additionally, LiveVox’s approach enables simpler, more cost-efficient deployment and scaling when compared to competing solutions.

 

   

Enterprise-grade architecture: LiveVox offers enterprise-grade compliance, security, and governance capabilities that benefit its customers, many of whom are in highly regulated industries. While LiveVox’s platform is scalable for businesses of all sizes, it primarily serves enterprise companies with complex contact center needs. Approximately 90% of LiveVox’s revenue comes from customers deploying greater than 50 seats with LiveVox.

 

   

Attractive financial profile, underpinned by several qualities:

 

   

Recurring revenue model: LiveVox’s revenue model consists of approximately 99% recurring revenue. For the years ended December 31, 2020, 2019, 2018 and 2017, LiveVox’s revenues were $102.5 million, $92.8 million, $77.2 million and $60.6 million, respectively, representing year- over-year growth of 10%, 20% and 27%, respectively. LiveVox’s Adjusted EBITDA for the years ended December 31, 2020, 2019, 2018 and 2017 was $8.5 million, $13.3 million, $11.0 million and $3.8 million respectively. For the three months ended March 31, 2021, LiveVox’s revenues and Adjusted EBITDA were 27.9 million and $(0.2) million, respectively.

 

   

Attractive unit economics: LiveVox benefits from strong sales efficiency, driven by the productivity of its salesforce and flexible commercial model. This model seeks to meet customers at any stage of their digital transformation by utilizing a “land and expand” strategy that allows LiveVox to provide a subset of its full contact center solution to meet the initial requirement, and then expand that relationship by providing more features and functionality that empowers the customer to continue on their journey to greater digital and AI adoption. For the years ended December 31, 2020, 2019, 2018 and 2017, LiveVox’s LTM Net Revenue Retention Rates were 106%, 118%, 120% and 115%, respectively. For the three months ended March 31, 2021, LiveVox’s LTM Net Revenue Retention Rate was 99%. Notwithstanding for the impact of COVID-19 on fiscal 2020, LiveVox’s average net revenue retention rate was 115% over the period 2017 to 2020. These qualities contribute to attractive unit economics. LiveVox estimates that the average calculated lifetime value of LiveVox’s customers is approximately seven times the associated cost of acquiring them for the time period from 2017 to 2020.

 

   

Resilience: LiveVox has not experienced a sustained disruption in its overall business as a result of COVID-19. In the first half of 2020, LiveVox’s usage-based revenues were impacted due to lower volumes, although usage revenue returned to growth in the third quarter of fiscal 2020. LiveVox’s contracted revenues (comprising approximately two thirds of LiveVox’s overall revenue) has grown at least 18% in each quarter of 2020 compared to the respective quarters of 2019. In the second half of fiscal 2020, LiveVox’s business rebounded to normalized levels of growth, and its bookings outperformed its budgeted plan for 2020 (that was set in 2019 and not subsequently adjusted).

Since LiveVox’s acquisition by funds affiliated with Golden Gate Capital in 2014, it has invested in reaching product maturity and developing a differentiated value proposition for enterprise customers. Over this time period, LiveVox sustained its revenue growth and sustained attractive unit economics. LiveVox intends to build on this foundation and increase its sales and marketing investment to capture future opportunity, including by increasing the size and reach of its go-to-market organization, expanding its channel and geographic presence, and continuing to build on the efficiency and productivity of its salesforce.


 

2


Table of Contents

Shift to Cloud-Based CCaaS Solutions

LiveVox believes that the vast majority of today’s businesses are still using on-premise solutions and the market for cloud-based contact center software is growing rapidly, driven by a number of factors LiveVox believes to be true, including the following:

 

   

Digital transformation: Many companies continue to modernize all aspects of their businesses, incorporating digital, mobile, and cloud technologies in all areas. This is especially true for contact centers, where cloud-based solutions increase agility, flexibility, and efficiency.

 

   

Automation of manual labor: Human labor has traditionally been a necessity and the largest area of spend for the contact center. However, modern AI and cloud technologies support offerings that streamline manual processes. As these solutions reach cost and performance parity with manual labor, LiveVox expects their penetration to further increase.

 

   

Increased focus on customer experience: In the past, contact centers were viewed primarily as cost centers. Today, they are viewed as an important part of the customer experience, and, ultimately, the enterprise brand. As a result, the contact center is viewed as a key point of contact in facilitating a high-value customer experience. Contact centers are increasingly focused on user engagement, resulting in greater focus on AI-enabled analytics and CRM. Organizations are subsequently evaluating their technology strategies and the role of the contact center agent, and increasingly shifting to cloud- based solutions.

 

   

Increased demand for work-from-home flexibility: Historically, organizations viewed on-premise infrastructure as better suited for deployments with significant security, compliance, and governance requirements. Those beliefs have evolved more towards acceptance of cloud-based solutions in recent years and the COVID-19 pandemic has accelerated this evolution as it caused a rapid increase in remote work and distributed workforces, accelerating the shift to cloud-based solutions.

Limitations to Broader Adoption of CCaaS

LiveVox believes that despite the clear need for cloud-based contact center software, existing competitors’ cloud solutions lack key functions and qualities, limiting the rate of adoption. LiveVox believes key factors limiting the broader adoption of cloud-based contact center solutions include:

 

   

Data integration: Traditional contact center solutions offer bespoke, department-level integration with a customer’s existing systems of record, resulting in data generated outside the contact center being separately managed and not easily accessible to the agent, further creating poor end user experiences.

 

   

Complex and costly implementation: Traditional contact center software vendors offer costly and time-intensive implementation processes that often require bespoke integration with disparate systems of record at each deployment site. These often require high upfront and ongoing maintenance costs, and considerable time invested by IT teams. As IT budgets become increasingly constrained, companies need solutions that are simple and cost-efficient to deploy and scale.

 

   

Risk mitigation: Existing solutions lack the risk and compliance capabilities required of large, global businesses today. This creates a growing business risk for companies relying on their contact center for customer-facing deployments. Large enterprises require these advanced risk mitigation capabilities in particular, to adhere to their compliance standards.

 

   

Investment in legacy infrastructure: Based on internal and industry estimates, LiveVox believes approximately 15% of current spend on contact center software solutions is comprised of cloud offerings. Businesses that have invested large amounts of capital into existing infrastructure often have upgrade cycles of greater than five years, further limiting their ability to quickly shift to cloud-based solutions.


 

3


Table of Contents

LiveVox’s Opportunity

LiveVox’s CCaaS market opportunity consists of the total spend on contact center software solutions. LiveVox estimates this market to be approximately $27 billion in 2020, of which approximately $5 billion is comprised of cloud-based solutions and LiveVox estimates total spend to reach approximately $83 billion by 2030. This growth is driven in part by the increasing automation of manual workflows using AI. LiveVox believes that as enterprises continue to execute on their digital transformation strategies, it is well positioned to capture a meaningful amount of this cloud transition growth as it increases its investment in sales and marketing to educate more potential customers on its platform.

LiveVox believes that the majority of its addressable market is unpenetrated today. Over time, LiveVox expects its total addressable market to grow considerably, due to a combination of cloud-based market tailwinds and LiveVox’s shift into new products to expand its addressable market. LiveVox continues to expand into other solutions, and benefit from market tailwinds in the cloud-based contact center software market as on-premise solutions shift to the cloud and contact center labor is automated.


 

4


Table of Contents

LiveVox’s Offerings

 

LOGO

LiveVox’s cloud-based contact center platform features a comprehensive, integrated suite of omnichannel, AI, CRM, and WFO capabilities. LiveVox’s products are differentiated by the following characteristics:

 

   

Comprehensive offering: LiveVox’s products provide voice, messaging, chat, AI, and WFO capabilities configured with LiveVox’s CRM. These products are provided in a single platform, with consistent user experiences across products and seamless integration with other systems of record.

 

   

Pre-integrated: LiveVox’s native CRM is integrated to work with existing vendor solutions. As a result, the implementation process is simple for IT teams to deploy and scale the LiveVox software. LiveVox’s solutions can be implemented in as quickly as three weeks. Additionally, LiveVox’s products unify disparate, department-level systems of record to present a single view to the agent, which eliminates data silos and provides great customer experiences.


 

5


Table of Contents
   

Cloud-native architecture: LiveVox uses a cloud-based, multi-tenant architecture model, with an approach designed from the ground up to operate securely while adhering to compliance and governance requirements. These features allow customers to easily scale their use of LiveVox’s products and spend with LiveVox, including adding new features and receiving software upgrades.

 

   

Enterprise-grade functionality: LiveVox’s products have strong enterprise grade compliance and security capabilities that help differentiate it from the competition. LiveVox offers advanced compliance capabilities that are demanded by its customers, many of whom are in highly regulated industries.

 

   

Flexible commercial model: LiveVox’s commercial model consists of an optimized combination of contracted billing and usage-based billing, with products delivered through bundles. These bundles enable LiveVox to bring in customers at multiple points in their digital transformation.

Benefits to LiveVox’s Customers

LiveVox’s platform uses AI capabilities to accelerate digital transformation for its customers. LiveVox believes that the following key attributes differentiate its platform, to both its customers and their end users:

 

   

Scalable, easy to use platform: LiveVox’s omnichannel/AI solution integrates with customers’ existing vendors, providing a flexible data platform that scales to reach customers as businesses grow. LiveVox allows businesses to rapidly adapt their strategies to meet the standards of changing technology and regulatory environments, in a simple product that is configured with value-added products built for mid-size and enterprise customers.

 

   

Accelerating digital transformation: LiveVox’s products enhance customers’ abilities to transform their businesses, increase agility, and create amazing customer experiences. LiveVox’s advanced omnichannel / AI capabilities and WFO tools provide insights on both its customers’ contact center operations, as well as on their customers. These insights facilitate strong customer and end user experiences, while improving agent productivity.

 

   

Cost-efficient: LiveVox’s commercial model typically requires lower implementation costs and resources when compared to other solutions, and following implementation, customers are able to scale their spend with their contact center needs. LiveVox’s AI-configured, native CRM facilitates faster deployments for its customers, enabling them to avoid long, costly integrations and the complexity that agents face when navigating multiple systems of record.

 

   

Consistent and continuous experience for end users: LiveVox’s integrated suite of products improves the end user experience by combining all of a user’s information, providing them with a consistent experience across SMS, voice, web, chat, and other channels, with all of their information stored in one central location. Today’s modern contact center needs to route the right communication to the right agents, providing agents access to a single view of pertinent customer information in real time to facilitate a seamless customer journey.

Growth Strategies

LiveVox is driving considerable growth in its business by executing across a number of dimensions including:

 

   

Acquire new customers: LiveVox is increasing its investment into sales and marketing to grow its customer base. LiveVox is growing its team of customer success managers and field-based reps, building its marketing capabilities to expand its reach, and investing in initiatives to improve salesforce productivity.


 

6


Table of Contents
   

Increase revenue from existing customers: LiveVox benefits from a land and expand model in which its revenue from existing customers grows over time. This is driven by LiveVox’s focus on large enterprise customers, as well as its sales strategy in which LiveVox often “lands” in a single department or line of business, providing it a strong upsell potential over time to expand the amount of business it does with a customer. For the last four years ending December 31, 2020, LiveVox’s LTM Net Revenue Retention Rate was 115%, on average. LiveVox believes a considerable opportunity exists for additional revenue from its existing customers through the sale of additional seats and products. LiveVox has identified opportunities it believes will allow it to expand its revenue from existing customers based on seats that are not currently using LiveVox’s software. LiveVox will continue to invest resources into identifying and executing on opportunities for increased penetration with existing customers.

 

   

Accelerate product innovation: LiveVox believes its platform is ideally suited for expansion and has a demonstrated track record of expanding the functionality and use cases of its products. Since 2014, LiveVox has expanded the functionality of its platform from an outbound-focused collections provider to an integrated omnichannel/AI platform that addresses all aspects of the agent experience. LiveVox will continue to invest in new technologies and harness existing ones.

 

   

Grow the LiveVox platform offering through partnerships and opportunistic M&A: LiveVox plans to continue to solidify its position as an enterprise cloud-based contact center software company. In addition to ongoing organic investment and partnerships, LiveVox will continue to explore opportunistic M&A as a source of product expansion, geographic reach, and growth.

LiveVox’s Products

LiveVox’s cloud contact center software is provided to customers on a subscription basis and consists of three major families of products all fully integrated to deliver a comprehensive end-to-end solution for its customers: CRM, Omnichannel and AI, and WFO. LiveVox’s CRM platform, designed specifically for contact centers, acts as an orchestration layer, allowing customers to design customer journey, create smart campaigns and ensure each interaction is routed to the appropriate employee. The combination of a unified data layer joined with omnichannel, AI and WFO functionalities ensures that customers receive what LiveVox views as all of the key components necessary to operate a modern contact center. The platform is built upon a public cloud infrastructure with the utilization of a micro-service architecture and a robust set of APIs, allowing for robust integrations and a network of partners further enhancing the platform.

CRM

 

   

Contact Manager and Extract, Transform, and Load (“ETL”) Tools — At the core of the LiveVox platform is a database layer that functions as a repository and orchestration layer for customers and their customer records. These records function as an index allowing each communication to be appropriately correlated to each customer. This database fulfills the need for customer service, sales, business process outsourcing (“BPO”) and other customers to ensure no single interaction is orphaned. The combination of historical data, consumer attributes and consent are utilized by multiple applications listed below to enhance consumers’ experiences in any channel and ensure that agents are provided relevant information and analytical models are appropriately set-up with the right data. Moreover, the application provides a visual layer, designed to understand customer population, create “what if” scenarios and execute simple and complex segmentation strategies for personalized campaign launches in an Omnichannel environment. Additionally, LiveVox has invested in a robust set of ETL tools designed to integrate with modern CRM platforms, systems of records and legacy systems, ensuring consistent management of data and high reliability of future AI deployments.


 

7


Table of Contents
   

U-CRMProvides a visual layer, surfacing relevant information to agents during every interaction. This offering provides relevant customer details, helping to expedite calls through a shorter authentication and verification process. Access to prior interactions across voice, email, SMS, chat and other channels helps agents understand use history and gives better context to the conversation. All communication channels are exposed to agents allowing them in real-time to send notifications via SMS or follow-up with an email if the conversation requires it. Moreover, supporting attachments, key notes and account details are available through a single interface. A universal inbox ensures all non-voice interactions are routed to agents to easily access and respond to customer inquiries.

 

   

U-TicketCreates support tickets and tracks all the relevant details to solve issues. This offering ensures that all communication including phone calls, emails, chat conversations and short message service (“SMS”) messages is tracked with all the details provided to customer teams, helping them solve problems quickly and empowering the team with visibility across the entire organization. It automates processes through simple configuration to route tickets to appropriate teams for quicker resolution, close out customer requests for increased satisfaction, and escalate urgent issues to appropriate teams and managers. It also provides access to channels, by offering digital forms that allow for simple ticket classification and identification by customers 24 hours a day, seven days a week.

 

   

U-ScriptA visual agent flow tool designed to provide guidance and visual navigation to agents. U-Script is commonly utilized to improve training for new employees. The tool can be configured and modified by administrators and provided to agents on demand. Compliance teams seek to ensure appropriate disclosures are presented during each and every conversation and any customer responses are captured and recorded in an indexed database.

 

   

Phone Dial Attempt Supervisor (“PDAS”) — Enables contact centers to set rules and restrictions relative to the number of voice calls attempted to any particular phone number and/or account. The application provides holistic capability to manage both campaign-based and manually initiated attempts across a number of granular settings from account type, telephone number types and consumer residing state. The application provides a visual administrative layer allowing compliance professionals to set rules and restrictions based on their enterprise communication standards. This application helps customers ensure consistency in communication and respects consumer privacy and legal standards between consumers and their brands.

Omnichannel and AI

 

   

Voice

 

   

Inbound — Provides customers with enterprise grade voice services and features. Utilizing LiveVox’s unified data model, callers are automatically identified through a combination of automatic number identification (“ANI”) match technology, third-party data lookups and/or customer self-authentication methods. Call history is dynamically retrieved, identifying prior agent conversations, agent ownership and/or unique customer attributes, helping to route calls via LiveVox’s automated call distributor (“ACD”). Callers are matched with agents based on a combination of availability, skills and proficiencies, ensuring the appropriate match of customer to agent. Administrators gain real-time visibility across their entire organization through a combination of dashboards, providing top-level metrics with drill-down capabilities and real-time coaching tools such as whisper, barge or take-over.

 

   

Outbound — Provides what LiveVox believes to be best-in-class outbound voice applications that combine the scalability of its platform with compliance standards required by companies in highly regulated industries. LiveVox’s outbound voice capabilities function independently as a stand- alone as well as blended into inbound voice operations, allowing customers to maximize agent


 

8


Table of Contents
 

efficiency and adhere to inbound and outbound voice service level agreements (“SLA”). LiveVox believes that its architecture ensures that each outbound dialing system contains software and hardware separation necessary to comply with the highest of regulatory standards. LiveVox’s outbound applications include the following functions:

 

   

Predictive dialing — a high-velocity dialing tool commonly utilized by sales organizations, enterprise customers as well as others obtaining strong forms of consent necessary to reach many customers in a short manner with live agents. The system utilizes predictive algorithms, which adjust in real-time to pair groups of agents with number of calls and consumer answer patterns.

 

   

Unattended dialing — a high-velocity voice messaging tool designed to deliver critical time- sensitive messages to consumers. Utilized particularly for the education, health care and financial services verticals to remind consumers of appointments and other vital business matters.

 

   

Outbound IVR (interactive voice response) — a messaging application allowing consumers to opt into conversations with agents based on confirmation of good/services or to serve as an immediate escalation point. Commonly utilized in the financial services and health-care verticals for reminders and ability to speak with a contact center individual.

 

   

Manual dialing — a strictly manual environment allowing agents to manually initiate a call to consumer via a single click on a phone number and/or a manual entry of phone numbers into the agent phone panel. The manual systems do not contain any capability or capacity to make any other forms of calls and is commonly utilized by an organization unsure of current consent and/or a potential revocation of consent by the consumer.

 

   

Human Call Initiator (HCI®) — a LiveVox-proprietary outbound dialing system that allows agents to launch calls manually via a single click (i.e., single click/single call). The user interface is optimized to deliver a single phone number to an agent to initiate a call while ensuring that no call is dialed automatically.

 

   

IVR and contact flow — LiveVox provides customers the tools to create cross-channel, self-service journeys that are custom fit for their customers. LiveVox offers a wide array of features allowing its customers to customize their IVR’s with their bespoke needs, including drag-and-drop features, 40+ pre-built modules, Text to Speech (TTS) capabilities, a library of professionally recorded voice prompts, and omnichannel capabilities. Additionally, LiveVox’s application programming interfaces (“API”) modules within Contact Flow Editor permit customers to use representational state transfer (“REST”) APIs to integrate with existing systems. LiveVox’s IVR supports a “bring-your-own bot environment” while also providing a number of connectors to leading bot and virtual agent providers.

 

   

Dashboard, Reporting, Wall-Boards — LiveVox provides a series of dashboard and reporting interfaces across the entire product suite, with the ability to drill-down to each individual interaction. A series of real-time dashboards provide valuable insights by displaying real-time contact center metrics across voice, email, SMS, and chat, including agent performance, tickets created or quality of interactions. The bi-directional nature of the dashboards provides true visibility into the contact center. Agent performance views provide the ability to understand agent status and monitor the exact conversation an agent is engaged in. The reporting suite offers a number of industry standards and best practice reports along with the capability to filter across multiple dimensions and combine interaction, agent and consumer data elements, providing true insight for enterprise organizations. Wall-boards are specifically designed for large scale display options within a contact center, providing contact center insight with a highly configurable interface with real-time alert capabilities.

 

   

SMS Messaging — LiveVox provides a comprehensive SMS suite for customers ensuring that multiple use cases across many verticals are met. These offerings ensure that messages are delivered at a high through-put across short-code, long-code, toll-free number and 10-digit long code (“10-DLC”)


 

9


Table of Contents
 

formats. The platform provides an attachment library and facilitates messages via rich communications systems (“RCS”) protocols. LiveVox’s aggregator-agnostic architecture supports the ability to independently route volume to observe high SLA standards for message delivery. Strategies and hold-out timeframes along with key word response management ensure customer service is always top of mind. The LiveVox platform provides customers the ability to consistently observe guidelines published by Cellular Telecommunications and Internet Association (“CTIA”) and offers customer tools for visibility of opt-in and opt-outs across the consumer base. A universal inbox is provided to ensure SMS responses are appropriately routed, distributed and managed by agents.

 

   

Email — LiveVox email offerings provide campaign and email response capabilities, ensuring all email interactions are stored at the customer level. The campaign-based function provides an HTML build tool, helping customers easily configure templates, insert variables and ensure content meets brand standards. A universal inbox provides agents access to email responses, eliminating race conditions and ensuring every interaction is joined with a customer profile. LiveVox provides the ability to comply with the requirements of the Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003, and every obtainment or removal of consent can be managed within the platform.

 

   

WebChat — WebChat offers LiveVox customers the capability of providing service through a web-based or mobile channel, allowing customers to begin conversations instantly through any site. The WebChat product ensures text, images, documents and even screen-share can be easily shared between consumers and agent employees to deliver quick problem resolution.

 

   

Virtual Agents & Bots LiveVox provides an environment that offers customers the ability to automate and enhance conversations with consumers. The platform offers three variants of assisted conversations

 

   

Managed Virtual Agent — a custom-created virtual agent capability combining Natural Language Processing, Automated Speech (Text) Recognition, Learning Intents & Suggestions paired with human oversight. This offering provides customers a fully managed service of tuning and maintaining Virtual Agents & Bots.

 

   

Self-Service Virtual Agent — a self-directed model to create a virtual agent and/or Bot utilizing a visual layer to prescribe intents, analyze patterns and create new automated flows for the virtual agent and/or Bot. This is designed for simpler user cases, quicker deployments and smaller enterprise organizations needing to make small changes quickly.

 

   

Bring Your Own — provides the ability for our customers to integrate their own virtual agent provider into the LiveVox framework utilizing a low code environment provided through the LiveVox Platform.

All of the above paths for customers offer three advantages: expedited deployments, enhanced customer experience and ability to deploy against any communication channel. Expedited deployments allow customers in a low code setting to integrate or connect their virtual agent into the contact center setting and enrich each conversation through utilization of LiveVox CRM data directly within the virtual agent, which ensures the virtual agent has the proper context for many interactions. Enhanced customer experience is driven through virtual agent awareness of customers and their data through the LiveVox CRM. In addition, this CRM ensures seamless hand-offs between virtual agents and human agents within the contact center, should the need to escalate arise. Any of the virtual agent deployments maybe set against a single or multiple channels in which customers operate, decreasing the need to build separate logic for each channel at a time and ensuring consistency in virtual agent communication.


 

10


Table of Contents
   

Campaign management — LiveVox offers a sophisticated tool for managing segmentation and creating campaigns for customers. The visual editor allows for creation of a variety of scenarios based on consumer attributes, prior interaction outcomes as well as compliance-based restrictions. Furthermore, strategies are utilized to optimize calling windows and message delivery based on optimized windows of time or compliance-based restrictions enacted by the customer.

WFO

 

   

Call and screen recording Provides administrators the capability to record voice conversations as well as record agent screens to help facilitate quality management activities, and to help with compliance and audits for customers in highly regulated verticals. A reporting graphical user interface (“GUI”) provides the ability to look-up conversations and filter for auditing purposes.

 

   

Business Intelligence — Provides administrators and operators business insight by combining CRM data with operational insight across channels through a combination of 150+ reports and dashboards. The LiveVox analyzer tool gives analysts insight to map new variables and create key metrics and dashboards to discover valuable insights. A number of machine learning models can also be applied to this tool to optimize enterprise performance.

 

   

Quality management — Provides feedback loops between contact center operators and agents by routing contact center interactions to quality management teams for evaluation and analysis. Quality teams can assign values and create scorecards to evaluate every interaction and provide instant agent feedback to ensure agent performance is optimized, documented, and ultimately improved on. An intuitive interface ensures a connection between quality teams and the agent desktop providing a single system to manage quality management. A learning library supports these efforts giving operators the ability to assign learning material to further enhance agent conversations.

 

   

Outside Collection Agency (OCA) analytics — Connects enterprise customers and the agencies that service them. This auditing tool provides enterprise customers the ability to track call volumes, agent performance, and call recordings to assess agency performance and compare against other outsourcers and create visibility through a normalized data set.

 

   

Speech and Text analytics (SpeechIQ®) — Allows organizations to accurately and objectively monitor, analyze, and score all agent interactions with one intuitive tool. It provides an understanding of call categorization and sentiment in detail. The tool can be used to help identify regulatory risk, poor performance, or customer dissatisfaction, among other factors.

 

   

Agent Scheduling — Provides an interface for administrators and agents to create, modify, bid, and forecast schedules. The tool provides the ability for customers to forecast needed volumes of agents based on inbound volume as well as set goals for service levels. The agent scheduling capability extends to agents with the ability to view, modify and/or trade shifts amongst other agents.

 

   

CSAT (Customer Satisfaction) — Gives customers the ability to understand consumer sentiment following an interaction, creating custom surveys delivered through the voice channel. A visual GUI provides the ability to analyze results for a deeper understanding at the interaction, agent, or contact center level.

 

   

Administration and APIs — LiveVox provides a robust set of APIs allowing customers to operate a number of customer or vertical solutions for consumer communications. The API set is highly scalable, allowing enterprise level customers to utilize it for various use cases including channel communication purposes, agent modification, and creation. A robust set of roles and permissions provide customers control of the LiveVox portal environment, which allows the customer to limit access points and ensure compliance and security standards are met for enterprise organizations.


 

11


Table of Contents

Customers

LiveVox had approximately 324 customers as of March 31, 2021, including enterprises, Fortune 1,000 financial institutions, and BPO (business process outsourcing) firms. As of March 31, 2021, no single customer represented more than 10% of LiveVox’s revenues. LiveVox’s enterprise customers span a variety of industries, including financial services (including leading Banks and Fin-Techs), healthcare, consumer/retail, and telecommunications. In 2020, approximately 90% of LiveVox’s revenue came from customers deploying greater than 50 seats with LiveVox.

Sales & Marketing

LiveVox’s go-to-market strategy is led by its direct sales force. This team is primarily focused on enterprise and mid-market organizations, which LiveVox defines as organizations with (i) greater than 50 seats and (ii) the estimated potential to spend at least $5,000 per month on LiveVox’s services. LiveVox has divided the sales team into three groups: (1) the national sales team comprised of (A) “Hunters” (who are responsible for new logo generation and who generally keep accounts with upsell potential for the first year following initial booking) and (B) “Farmers” (who are responsible for account upsell and retention following the transition from a Hunter) focused on accounts greater than or equal to 250 agents (which LiveVox considers large accounts), (2) the mid- market sales team comprised of Hunters and Farmers focused on accounts between 50 and 250 agents and accounts where we estimate we do not have potential to increase the amount of business we do with such customer, and (3) overlay teams focused on facilitating sale leads from LiveVox’s channel partners and on specific products on an as needed basis. The overlay teams are responsible for assisting the Hunters in meeting their sales objectives in their area of expertise. LiveVox has developed a targeted and disciplined, outcomes- based land and expand sales strategy designed to enable its sales force to efficiently generate and close net new logo opportunities within LiveVox’s ideal customer profile (ICP). Additionally, LiveVox has a strategic cadence around upsell and cross-sell opportunities that center on regularly scheduled customer business reviews. These business reviews lead to additional products being showcased/positioned into LiveVox’s existing customer base. In addition, LiveVox intends to continue investing in initiatives to grow its team of business consultants, technical account managers and customer success managers, build out its marketing capabilities, and continue to improve salesforce productivity.

Supporting both the National Account and Mid-Market Hunters is LiveVox’s outbound lead generation (OLG) team. This OLG team cultivates and nurtures over 100,000 subscriber companies and prospects in partnership with the sales team while also fielding inbound prospect traffic (web chat and inbound inquiries) in an effort to bring them into the sales funnel as highly qualified leads.

LiveVox’s marketing team uses a data-driven approach for lead generation and nurture activities. LiveVox offers product “bundles” that align with customer needs and take advantage of its differentiating attributes. Using intent analytics, LiveVox crafts streams of content and advertising specifically geared to each prospect and their product interests, in an effort to establish relevant awareness and interaction, and ultimately purchase consideration. To accomplish this, the team employs a number of tactics, including content curation, a full array of digital marketing, trade shows, webinars, industry analyst programs, public relations, and more. LiveVox’s lead generation team works to establish a rapport with each prospect, ultimately introducing them to a sales Account Executive to continue the relationship.

Research and Development

LiveVox’s research and development drives continuous innovation cycles for its contact center platform. LiveVox’s functional, industry, and technology experts collaborate with customers and partners to analyze data trends, apply industry best practices, and innovate on new products that result in new features and functions regularly being added to the platform — a process LiveVox refers to as Data Driven Innovation (DDI). With its


 

12


Table of Contents

breadth of deeply integrated contact center products and over 300 customers, LiveVox has a wealth of data to drive new features for agent experience and customer experience including data analytics, machine learning, and artificial intelligence. These features are bundled and released as new platform releases three times a year.

LiveVox’s core research and development operations are based in San Francisco, California; Medellin, Colombia; and Bangalore, India. This geographic footprint allows for recruitment from broad and diverse talent pools. As of the date of this filing LiveVox had over 135 full-time equivalent employees in LiveVox’s research and development group. LiveVox’s U.S. GAAP research and development expenses totaled $20.2 million for the year ending December 31, 2020, and $6.2 million for the three months ended March 31, 2021. LiveVox intends to increase its research and development team size over the near term to extend its opportunities for product innovation.

Professional Services

LiveVox offers comprehensive professional services to its customers to assist in the successful implementation and optimization of the LiveVox products. LiveVox’s professional services include application configuration, system integration, business process optimization, technical support and training. LiveVox’s customers may use its professional services team for initial implementation of the LiveVox products or when expanding their use of LiveVox’s application suite.

Being cloud-native reduces implementation time and complexity by removing the need for on-premise hardware or dedicated infrastructure. LiveVox believes that it can deploy and optimize its products in significantly less time than required for deployments of legacy on-premise contact center systems. Because of this, LiveVox’s professional services engagements typically focus on optimization and process improvement, rather than installation or logistics. A full contact center suite of products can be implemented by LiveVox in as little as three weeks as compared to what LiveVox believes to be as much as six months for its competitors.

Technology and Operations

LiveVox’s highly scalable SaaS platform was developed with the end customer in mind. LiveVox’s platform uses market-oriented research, as well as development and operational experience. LiveVox’s platform is comprised of in-house developed intellectual property, and open source and commercially available components. LiveVox’s platform is designed to be redundant and scalable, to leverage cloud-native capabilities in support of business continuity and disaster recovery (BCDR) functionality, and to support multi-tenancy from the ground up. In addition, the architecture is designed to support capacity increases on-demand, continuous integration and continuous development (CI/CD), and life cycle management with minimal or no impact to customers’ use of LiveVox’s products.

LiveVox currently delivers its products globally from five public cloud third-party data center facilities located in Virginia, Ohio, Oregon, Canada, and Germany, and one third-party co-location facility in New York. LiveVox’s infrastructure is designed to support real-time mission-critical telecommunications, applications, and operational support systems as well as multiple customer connectivity methods over carrier services as well as direct connect. LiveVox’s infrastructure is built with redundant, fault-tolerant components in distinct and secure availability zones forming protective layers for LiveVox’s applications and customer data.

LiveVox has implemented and maintained an operations team that focuses on four primary pillars: capacity management, performance, security, and availability. The 24x7x365 operations teams ensure continuous health and reliability by monitoring LiveVox’s data centers, applications, and carrier services for potential issues, capacity management, potential security incidents, and the overall health and integrity of LiveVox’s platform environments.


 

13


Table of Contents

Competition

LiveVox believes that the cloud-based customer engagement and communications industry is highly competitive, and it expects competition to increase in the future. LiveVox faces competition from established providers as well as emerging startups focusing on niche services and channels. LiveVox’s key competitors include:

 

   

traditional on-premise hardware business communications providers such as Avaya Inc., Aspect Software, Cisco Systems, Inc., Mitel Networks Corporation, and partners that resell or license their software;

 

   

cloud-based contact center software providers such as Five9, NICE InContact, Genesys, Serenova, 8x8, RingCentral and Talkdesk;

 

   

digital engagement providers such as eGain Corporation, Lithium Technologies and LivePerson; and

 

   

developer-focused software providers such as Amazon, and Twilio.

Most of LiveVox’s direct competitors have greater name recognition, longer operating histories, more diversified customer bases and larger marketing and development budgets. As a result, these competitors may have greater credibility with LiveVox’s existing and potential customers and may be better able to withstand an extended period of downward pricing pressure. Additionally, with cloud-deployment gaining ever more adherents and technology advancing rapidly, LiveVox expects intensified competition in the future.

LiveVox believes the principal competitive factors in its markets include, but are not limited to:

 

   

platform reliability and scalability

 

   

breadth and depth of platform features

 

   

compliance and security capabilities

 

   

ease of administration, integration, and use

 

   

ease and speed of deployment

 

   

domain expertise in contact center operations

 

   

strength of third-party partnership ecosystem

 

   

artificial intelligence capabilities

 

   

scale and expertise offered to the growing market for customer engagement and contact center services

Recent Developments

Business Combination Completed

On June 18, 2021 (the “Closing Date”), LiveVox Holdings, Inc. (formerly known as Crescent Acquisition Corp), a Delaware corporation (the “Company”), consummated the previously announced business combination pursuant to an Agreement and Plan of Merger, dated January 13, 2021 (the “Merger Agreement”), by and among the Company, Function Acquisition I Corp, a Delaware corporation and direct, wholly owned subsidiary of the Company (“First Merger Sub”), Function Acquisition II LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of the Company (“Second Merger Sub”), LiveVox Holdings, Inc., a Delaware corporation (“Old LiveVox”), and GGC Services Holdco, Inc., a Delaware corporation, solely in its capacity as the representative, agent and attorney-in-fact (in such capacity, the “Stockholder Representative”) of LiveVox TopCo, LLC, a Delaware limited liability company and the sole stockholder of Old LiveVox as of immediately prior to the First Merger (as defined below) (the “LiveVox Stockholder”), which provided for, among other things, (a) the merger of First Merger Sub with and into Old LiveVox, with Old LiveVox continuing as the


 

14


Table of Contents

surviving corporation (the “First Merger”), and (b) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Old LiveVox with and into Second Merger Sub, with Second Merger Sub continuing as the surviving entity (the “Second Merger” and, together with the First Merger and the other transactions contemplated by the Merger Agreement, the “Business Combination”). In connection with the Business Combination, (a) the Company changed its name to “LiveVox Holdings, Inc.” and (b) Second Merger Sub, as the surviving entity of the Second Merger, changed its name to “LiveVox Intermediate LLC” (“LiveVox Intermediate”). As a result of the Business Combination, (a) the Company directly owns all of the equity interests of LiveVox Intermediate and indirectly owns the equity interests of its subsidiaries (LiveVox Intermediate together with its subsidiaries, “LiveVox”) and (b) the LiveVox Stockholder, the sole stockholder of Old LiveVox prior to the Business Combination, holds 66,637,092 shares of the Class A common stock, par value $0.0001 per share, of the Company (the “Common Stock”), not include the Earn-Out Shares (as defined herein).

On June 22, 2021, the Company’s ticker symbols on Nasdaq for its Common Stock, warrants to purchase Class A Stock and public units were changed to “LVOX,” “LVOXW” and “LVOXU,” respectively.

Organization Structure

 

LOGO

Corporate Information

We were incorporated in Delaware in November 2017 as a blank check company under the name Crescent Acquisition Corp. On June 18, 2021, LiveVox and Crescent Acquisition Corp consummated the transactions contemplated under the Merger Agreement, following the approval at the special meeting of stockholders of Crescent Acquisition Corp on June 16, 2021. In connection with the closing of the Business Combination, we changed our name to LiveVox Holdings, Inc.

LiveVox’s headquarters is 655 Montgomery Street, Suite 1000, San Francisco, California, 94111. LiveVox also has offices in Alpharetta, Georgia; Greenwood Village, Colorado; Columbus, Ohio; and Fairview Heights,


 

15


Table of Contents

Illinois. LiveVox also has subsidiaries in Bangalore, India and Medellin, Colombia. LiveVox’s website address is www.livevox.com. LiveVox owns or has rights to trademarks that it uses in operating its business, including the LiveVox corporate name, logo, and domain names. LiveVox owns or has the rights to copyrights, trade secrets and other proprietary rights that protect the content of its products.

Summary of Risk Factors

The business and financial condition of LiveVox is subject to numerous risks and uncertainties. Below is a summary of material factors that make an investment in our securities speculative or risky. The occurrence of one or more of the events or circumstances described below, alone or in combination with other events or circumstances, may have an adverse effect on the business, cash flows, financial condition and result of operations of LiveVox. Importantly, this summary does not address all of the risks and uncertainties that we face. Additional discussion of the risks and uncertainties summarized in this risk factor summary, as well as other risk and uncertainties that we face, can be found under the section entitled “Risk Factors” in this prospectus beginning on page 21. The below summary is qualified in its entirety by that more complete discussion of such risks and uncertainties. You should consider carefully the risks and uncertainties described under the section entitled “Risk Factors” as part of your evaluation of an investment in our securities.

 

   

If LiveVox is unable to attract new customers or sell additional products and functionality to its existing customers, its revenue and revenue growth will be harmed.

 

   

LiveVox is subject to risks related to the ongoing COVID-19 pandemic.

 

   

LiveVox’s recent rapid growth may not be indicative of its future growth.

 

   

LiveVox’s growth depends in part on the success of its strategic relationships with third parties.

 

   

Security breaches or other cyber attacks on its systems, could result in litigation and regulatory risk and thus harm LiveVox’s reputation and its business.

 

   

The markets in which LiveVox participates involve numerous competitors and are highly competitive, and if it does not compete effectively, its operating results could be harmed.

 

   

If LiveVox’s existing customers terminate their product subscriptions or reduce the scope of their product subscriptions and related usage, its revenues and gross margins will be harmed and it will be required to spend more money to grow its customer base.

 

   

The contact center software solutions market is subject to rapid technological change, and LiveVox must innovate in order to maintain and grow its business.

 

   

LiveVox is subject to risks related to compliance with or changes in domestic or foreign laws and regulations.

 

   

LiveVox depends on its employees and management team.

 

   

LiveVox depends on its intellectual property rights to protect its technology and its brand.

 

   

LiveVox faces risks relating to its status as a “controlled company” under Nasdaq’s rules.

 

   

The potential liquidity and trading of LiveVox’s public securities.

 

   

Any potential litigation involving LiveVox.

 

   

Expectations regarding the time during which LiveVox will be an “emerging growth company” under the JOBS Act.

 

   

Potential for litigation, inquiries from the SEC and other regulatory bodies, other disputes or proceedings which may include, among others, monetary judgments, penalties or other sanctions,


 

16


Table of Contents
 

claims invoking the federal and state securities laws and contractual claims resulting from the restatement of Crescent Acquisition Corp’s previously issued financial statements and material weakness in internal control over financial reporting, the change in accounting for the warrants and other matters raised or that may in the future be raised by the SEC.

 

   

Other risks and uncertainties indicated in this prospectus, including those set forth under the section entitled “Risk Factors.”


 

17


Table of Contents

The Offering

The following summary of the offering contains basic information about the offering and our Common Stock and is not intended to be complete. It does not contain all the information that may be important to you. For a more complete understanding of our Common Stock, please refer to the section titled “Description of Securities.”

Issuance of Common Stock

 

Shares of Common Stock offered by us

Up to 13,333,333 shares of our Common Stock, which consists of (i) 833,333 shares of Common Stock that are issuable upon the exercise of Forward Purchase Warrants and (ii) up to 12,500,000 shares of Common Stock that are issuable upon the exercise of Public Warrants.

 

Shares of Common Stock outstanding prior to exercise of all warrants

94,628,387 shares (as of June 18, 2021)

 

Shares of Common Stock outstanding assuming exercise of all warrants

107,961,720 shares (based on total shares outstanding on June 18, 2021)

 

Exercise price of warrants

$11.50 per share, subject to adjustment as described herein.

 

Use of proceeds

We will receive up to an aggregate of approximately $153.3 million from the exercise of all of the warrants, assuming the exercise in full of all of the warrants for cash. We expect to use the net proceeds from the exercise of the warrants for general corporate purposes. See the section titled “Use of Proceeds.”

Resale of Common Stock and Warrants

 

Shares of Common Stock offered by the Selling Shareholders

We are registering the resale by the Selling Shareholders named in this prospectus, or their permitted transferees, and an aggregate of 85,795,425 shares of Common Stock, consisting of:

 

   

up to 7,500,000 PIPE Shares;

 

   

up to 2,500,000 Forward Purchase Shares;

 

   

up to 833,333 shares of common stock underlying the Forward Purchase Warrants; and

 

   

up to 74,962,092 shares of Common Stock pursuant to the Amended and Restated Registration Rights Agreement.

 

  In addition, we are registering 12,500,000 shares of Common Stock issuable upon exercise of the Public Warrants that were previously registered.

 

18


Table of Contents

Warrants offered by the Selling Shareholders

Up to 833,333 Forward Purchase Warrants

 

Redemption

The Warrants are redeemable in certain circumstances. See “Description of Securities - Warrants - Public Warrants and Forward Purchase Warrants” for further discussion.

 

Use of proceeds

We will not receive any of the proceeds from the sale of the shares of Common Stock or warrants by the Selling Shareholders.

 

Nasdaq ticker symbols

Our Common Stock and Public Warrants are listed on Nasdaq under “LVOX” and “LVOXW”, respectively.

For additional information concerning the offering, see the section titled “Plan of Distribution” beginning on page 145 of this prospectus. .


 

19


Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about:

 

   

the Company’s ability to maintain its listing on Nasdaq;

 

   

the Company’s ability to raise financing or complete acquisitions in the future;

 

   

the Company’s success in retaining or recruiting, or changes required in, its officers, key employees or directors;

 

   

the future financial performance of the Company;

 

   

the outcome of any legal proceedings that may be instituted against the Company;

 

   

the high level of competition in the cloud contact center industry and the intense competition and competitive pressures from other companies in the industry in which the Company will operate;

 

   

reliance on information systems and the ability to properly maintain the confidentiality and integrity of data;

 

   

the occurrence of cyber incidents or a deficiency in cybersecurity protocols;

 

   

the ability to obtain third-party software licenses for use in or with the Company’s products;

 

   

the business, operations and financial performance of the Company, including market conditions and global and economic factors beyond the Company’s control;

 

   

the impact of COVID-19 and related changes in base interest rates and significant market volatility on the Company’s business, our industry and the global economy;

 

   

the effect of legal, tax and regulatory changes;

 

   

other statements preceded by, followed by or that include the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions; and

 

   

other risks and uncertainties set forth in the section entitled “Risk Factors”.


 

20


Table of Contents

RISK FACTORS

Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with the other information in this prospectus, including our consolidated financial statements and the related notes appearing at the end of this prospectus and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our securities. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may have a material adverse effect on the our business, reputation, revenue, financial condition, results of operations and future prospects, in which event the market price of our Common Stock could decline, and you could lose part or all of your investment. Unless otherwise indicated, reference in this section and elsewhere in this prospectus to our business being adversely affected, negatively impacted or harmed will include an adverse effect on, or a negative impact or harm to, the business, reputation, financial condition, results of operations, revenue and our future prospects. The material and other risks and uncertainties summarized above and described below are not intended to be exhaustive and are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially and adversely from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below. See the section titled “Cautionary Note Regarding Forward-Looking Statements.”

Risks Relating to Our Business and Industry

LiveVox’s quarterly and annual results may fluctuate significantly and may not fully reflect the underlying performance of its business.

LiveVox’s quarterly and annual results of operations, including its revenues, profitability and cash flow have varied, and may vary significantly in the future, and period-to-period comparisons of its operating results may not be meaningful. Accordingly, the results of any one quarter or period, or series of quarters or periods, should not be relied upon as an indication of future performance. LiveVox’s quarterly and annual financial results may fluctuate as a result of a variety of factors, many of which are outside its control and, as a result, may not fully reflect the underlying performance of its business. Fluctuation in quarterly and annual results may harm the value of LiveVox’s Common Stock. Factors that may cause fluctuations in LiveVox’s quarterly and annual results include, without limitation:

 

   

market acceptance of its products;

 

   

its ability to attract new customers and grow its business with existing customers;

 

   

customer renewal rates;

 

   

customer attrition rates;

 

   

its ability to adequately expand its sales and service team;

 

   

its ability to acquire and maintain strategic and customer relationships;

 

   

the timing and success of new product and feature introductions by it or its competitors or any other change in the competitive dynamics of its industry, including consolidation, partnership or collaboration among competitors, customers or strategic partners;

 

   

network outages or security incidents, which may result in additional expenses or losses, legal or regulatory actions, the loss of customers, the provision of customer credits, and/or harm to its reputation;

 

   

general economic, industry and market conditions;

 

21


Table of Contents
   

catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, other adverse weather and climate conditions and pandemics, including the ongoing COVID-19 pandemic;

 

   

the amount and timing of costs and expenses related to the maintenance and expansion of its business, operations and infrastructure;

 

   

seasonal factors that may cause its revenues to fluctuate across quarters;

 

   

inaccessibility or failure of its products due to failures in the products or services provided by third parties;

 

   

the amount and timing of costs and expenses related to its research and development efforts or in the acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies;

 

   

its ability to successfully integrate companies and businesses that it acquires and achieve a positive return on its investment;

 

   

its ability to expand and effectively utilize its network of master agents, referral agents and other third- party selling partners;

 

   

changes in accounting rules under current and future U.S. GAAP;

 

   

changes in its pricing policies or those of its competitors;

 

   

increases or decreases in the costs to provide its products or pricing changes upon any renewals of customer agreements;

 

   

the level of professional services and support it provides its customers;

 

   

fluctuations or changes in the components of its revenue;

 

   

the addition or loss of key customers, including through acquisitions or consolidations;

 

   

compliance with, or changes in, the current and future domestic and international regulatory environments;

 

   

the hiring, training and retention of its key employees;

 

   

changes in law or policy that impact it or its customers or suppliers;

 

   

the outcome of litigation or other claims against it;

 

   

the ability to expand internationally, and to do so profitably;

 

   

its ability to obtain additional financing on acceptable terms if and when needed; and

 

   

advances and trends in new technologies and industry standards.

If LiveVox is unable to attract new customers or sell additional products and functionality to its existing customers, its revenue and revenue growth will be harmed.

To increase its revenue, LiveVox must add new customers, increase the amount and types of business it does with existing customers, and encourage existing customers to renew their product subscriptions on terms favorable to LiveVox. As LiveVox’s industry matures, as its customers experience seasonal trends in their business, or as competitors introduce lower cost or differentiated products or services that are perceived to compete favorably with LiveVox, its ability to add new customers and renew, maintain or sell additional products to existing customers based on pricing, cost of ownership, technology and functionality could be harmed. As a result, LiveVox’s existing customers may not renew their agreements or may decrease the amount of business they do with LiveVox, or may place increased pressure on LiveVox for pricing concessions, and LiveVox may be unable to attract new customers or grow or maintain its business with existing customers, each of which could harm its revenue and growth.

 

22


Table of Contents

The effects of the COVID-19 pandemic have had and could continue to have a material adverse effect on LiveVox’s results of operations and financial condition or on the operations of many of its customers and third-party suppliers, and the duration and extent to which this will impact its future results of operations and overall financial performance remains uncertain.

In December 2019, a novel coronavirus disease known as COVID-19 was reported and on March 11, 2020, the World Health Organization, or WHO, characterized COVID-19 as a pandemic. This pandemic has resulted in a widespread health crisis that has continued to significantly harm the U.S. and global economies and has caused significant fluctuation in financial markets and regulatory frameworks and may impact demand for LiveVox’s products.

In accordance with the various and changing regulatory frameworks and social distancing and other business or office closure orders and recommendations of applicable government agencies, all of LiveVox’s employees have temporarily transitioned to work-from-home operations and LiveVox has canceled all business travel by its employees except where necessary and properly authorized, which has changed how it operates its business. LiveVox’s customers and business partners are also subject to various and changing regulatory frameworks and social distancing and business or office closure orders and recommendations and travel restrictions or prohibitions, which have changed the way it interacts with its customers and business partners. Moreover, the conditions caused by the COVID-19 pandemic, the extent of which depends upon its prolonged impact, has or may:

 

   

harm its ability to renew and maintain its relationships with its existing customers;

 

   

cause its existing customers to reduce the amount of business they do with it, seek price concessions, declare bankruptcy or go out of business, which would harm its revenue;

 

   

result in some of its customers failing to comply with the terms of their agreements, including payment terms, due to economic uncertainty, financial hardship, and even failure of these businesses, which could result in it being required to take action to collect payments, terminate their product subscriptions, increase accounts receivable, and reduce consumer collections, any of which could increase its expenses, reduce its cashflow, and harm its revenues and results of operations;

 

   

make it more difficult for it to sell additional products or functionality to its existing customers;

 

   

reduce the rate of spending on enterprise software solutions or cloud-based enterprise contact center systems generally;

 

   

delay prospective customers’ decisions to subscribe to its products, increase the length of sales cycles, or slow the typical growth in the use of its products once customers have initially deployed its products;

 

   

harm its ability to effectively market and sell its solutions, particularly during social distancing and office closure orders;

 

   

change the mix and sizes or types of organizations that purchase its products;

 

   

delay the introduction of enhancements to its products and market acceptance of any new features and products;

 

   

harm its ability to establish and/or grow its international sales and operations;

 

   

harm its ability to recruit, onboard and successfully integrate new employees, including members of its direct sales force, both domestically and internationally, as a result of not being able to interface in person;

 

   

harm its ability to maintain its corporate culture with an employee base temporarily working remotely and facing unique personal and professional challenges;

 

23


Table of Contents
   

increase the burden on its technical operations infrastructure, which could harm the capacity, stability, security and performance of its operations infrastructure and potentially leave it more vulnerable to security breaches;

 

   

increase the risk that it may experience cybersecurity-related events such as COVID-19 themed phishing attacks, exploitation of any cybersecurity flaws that may exist, an increase in the number cybersecurity threats or attacks, and other security challenges as a result of its employees and service providers continuing to work remotely during the COVID-19 pandemic, and potentially beyond as remote work and resource access expand;

 

   

limit its ability to efficiently deliver products to its larger customers, as those products often require services that have sometimes been performed onsite, which could delay implementation of its products at new customers;

 

   

harm its ability to manage, maintain or increase its network of master agents, referral agents and other third-party selling partners to sell its products, and make it more difficult for them to effectively assist it with their sales efforts;

 

   

impact the health and safety of its employees, including its senior management team, and their ability to perform services;

 

   

cause its management team to continue to commit significant time, attention and resources to monitor the COVID-19 pandemic and seek to mitigate its effect on its business and workforce; and

 

   

lead to the adoption of additional new laws and regulations that it and/or its customers and partners are required to comply with and that could harm its results of operations and may subject it to COVID-19 related litigation.

Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter. While several countries, as well as certain states, counties and cities in the United States, began to relax the early public health restrictions with a view to partially or fully reopening their economies, many cities, both globally and in the United States, have since experienced a surge in the reported number of cases and hospitalizations related to the COVID-19 pandemic. This increase in cases has led to the reintroduction of restrictions and business shutdowns in certain states, counties and cities in the United States and globally and could continue to lead to the re-introduction of such restrictions elsewhere. Additionally, in December 2020, the U.S. Food and Drug Administration authorized vaccines produced by Pfizer-BioNTech and Moderna for emergency use. However, it remains unclear how quickly the vaccines will be distributed nationwide and globally or if or when “herd immunity” will be achieved and the restrictions that were imposed to slow the spread of the virus will be lifted entirely. The delay in distributing the vaccines could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time. Even after the COVID-19 pandemic subsides, the U.S. economy and most other major global economies may experience or continue to experience a recession, and LiveVox’s business and operations could be materially adversely affected by a prolonged recession in the U.S. and other major markets.

Any of the foregoing factors could significantly harm LiveVox’s future sales, operating results, cash flow, gross margin and overall financial performance, which could cause it to experience a decreased level of growth of its business and make its future financial results and prospects difficult to predict. The COVID-19 pandemic and its impact on LiveVox and the U.S. and global economies, could limit its ability to forecast its future operating results, including its ability to predict revenue and expense levels, and plan for and model future results of operations. Moreover, because a significant portion of LiveVox’s revenue is derived from existing customers, downturns in new sales will not immediately be reflected in its operating results and may be difficult to discern until future periods. LiveVox’s competitors could experience similar or different impacts as a result of COVID-19, which could result in changes to its competitive landscape.

The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the ongoing severity and transmission rate of the virus, the

 

24


Table of Contents

extent and effectiveness of vaccine programs and other containment actions, the duration of social distancing, office closure and other restrictions on businesses and society at large, and the specific impact of these and other factors on LiveVox’s business, employees, customers and partners. If LiveVox is not able to respond to and manage the impact of such events effectively, its business will be harmed. There are no comparable recent events that provide guidance as to the effect the COVID-19 pandemic may have and, as a result, the ultimate impact of the outbreak on its business and operations is highly uncertain and subject to change. The effects of the COVID-19 pandemic have had, and could continue to have a material impact on LiveVox’s results of operations and increase many of the other risks described under “Risk Factors” and elsewhere herein.

LiveVox’s recent rapid growth may not be indicative of its future growth, and if it continues to grow rapidly, it may fail to manage its growth effectively.

For the years ended December 31, 2017, 2018, 2019 and 2020, LiveVox’s revenues were $60.6 million, $77.2 million, $92.8 million and $102.5 million, respectively, representing year-over-year growth of 27.3%, 20.2% and 10.5%, respectively. In the future, as LiveVox’s revenue increases, its annual revenue growth rate may decline. LiveVox believes its revenue growth will depend on a number of factors, including its ability to:

 

   

compete with other vendors of cloud-based enterprise contact center systems, including recent market entrants, and with providers of legacy on-premise systems;

 

   

increase its existing customers’ use of its products and further develop its partner ecosystem;

 

   

strengthen and improve its products through significant investments in research and development and the introduction of new and enhanced products;

 

   

introduce its products to new markets outside of the United States and increase global awareness of its brand;

 

   

selectively pursue acquisitions that enhance its product offerings; and

 

   

respond to general macro-economic factors and industry and market conditions.

If LiveVox is not successful in achieving these objectives, its ability to grow its revenue may be harmed. In addition, LiveVox plans to continue to invest in future growth, including expending substantial financial and other resources on:

 

   

expanding its sales and marketing organizations;

 

   

its technology infrastructure, including systems architecture, management tools, scalability, availability, performance and security, as well as disaster recovery measures;

 

   

its product development, including investments in related personnel and the development of new products, as well as new applications and features for existing products;

 

   

international expansion; and

 

   

general administration, including legal, regulatory compliance and accounting expenses.

Moreover, LiveVox continues to expand its headcount and operations. LiveVox grew from 422 employees as of December 31, 2018 to 461 employees as of December 31, 2019, and to 506 employees as of December 31, 2020. As of March 31, 2021, LiveVox had 535 employees. LiveVox anticipates that it will continue to expand its operations and headcount in the near term and beyond. This growth has placed, and future growth will place, a significant strain on its management, administrative, operational and financial resources, company culture and infrastructure. LiveVox’s success will depend in part on its ability to manage this growth effectively while retaining personnel. To manage the expected growth of its operations and personnel, it will need to continue to improve its operational, financial and management controls and its reporting systems and procedures. Failure to effectively manage growth could result in difficulty or delays in adding new customers, declines in quality or

 

25


Table of Contents

customer satisfaction, increases in costs, system failures, difficulties in introducing new features or products, the need for more capital than it anticipates or other operational difficulties, and any of these difficulties could harm its business performance and results of operations.

The expected addition of new employees and the capital investments that LiveVox anticipates will be necessary to help it grow and to manage that growth may make it more difficult to generate earnings or offset any future revenue shortfalls by reducing costs and expenses in the short term. If LiveVox fails to manage its anticipated growth, it will be unable to execute its business plan successfully.

Failure to adequately retain and expand LiveVox’s key employees, including those in its sales force, could impede its growth.

Key to LiveVox’s success is the continuity and development of key employees, including those in its sales force. LiveVox needs to continue to retain key employees, including members of its sales force while expanding and optimizing its sales infrastructure in order to grow its customer base and business. LiveVox plans to continue to expand its sales force. Identifying and recruiting qualified personnel and training them in the use and sale of its products requires significant time, expense and attention. It can take several months before LiveVox’s sales representatives are fully trained and productive. LiveVox’s business may be harmed if it fails to retain key employees, including members of its sales force, or if its efforts, and the expense incurred, to expand and train its sales force do not generate a corresponding increase in revenues. In particular, if LiveVox is unable to hire, develop and retain talented sales personnel or if new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, it may not be able to realize the expected benefits of this investment or increase its revenues.

If LiveVox fails to manage its technical operations infrastructure, its existing customers may experience service outages, its new customers may experience delays in the deployment of its products, and it could be subject to, among other things, claims for credits or damages.

LiveVox’s success depends in large part upon the capacity, stability, security and performance of its operations infrastructure. From time to time, LiveVox has experienced interruptions in service, and it may experience such interruptions in the future. These service interruptions may be caused by a variety of factors, including infrastructure changes, human or software errors, viruses, security attacks, fraud, spikes in customer usage and denial of service issues. In some instances, it may not be able to identify the cause or causes of these performance problems within an acceptable period of time. LiveVox’s failure to achieve or maintain expected performance levels, stability and security, particularly as it increases the number of users of its products and the product applications that run on its system, could harm its relationships with its customers, result in claims for credits or damages, damage its reputation, significantly reduce customer demand for its products, cause it to incur significant expense and personnel time replacing and upgrading its infrastructure and harm its business.

LiveVox has experienced significant growth in the number of agent seats and interactions that its infrastructure supports. As the number of agent seats within its customer base grows and its customers’ use of its products increases, LiveVox needs to continue to make additional investments in its capacity to maintain adequate and reliable stability and performance, the availability of which may be limited or the cost of which may be prohibitive, and any failure may cause interruptions in service that may harm its business. In addition, LiveVox needs to properly manage its operations infrastructure in order to support version control, changes in hardware and software parameters and the evolution of its suite of products. If LiveVox does not accurately predict its infrastructure requirements or efficiently improve its infrastructure, its business could be harmed.

LiveVox’s growth depends in part on the success of its strategic relationships with third parties and its failure to successfully maintain, grow and manage these relationships could harm its business.

LiveVox leverages strategic relationships with third-party technology providers, including telecommunications providers. These relationships are typically not exclusive and its partners often also offer

 

26


Table of Contents

products to its competitors. As LiveVox grows its business, it will continue to depend on both existing and new strategic relationships. LiveVox’s competitors may be more successful than it is in establishing or expanding relationships with such third-party technology providers. Furthermore, there has and continues to be a significant amount of consolidation in the technology industry, including telecommunications providers, and if its partners are acquired, fail to work effectively with it or go out of business, they may no longer support its products, or may be less effective in doing so, which could harm its business, financial condition and operations. If LiveVox is unsuccessful in establishing or maintaining its strategic relationships with third parties, its ability to compete in the marketplace or to grow its revenues could be impaired and its operating results may suffer.

In addition, identifying new third-party technology providers, and negotiating and documenting relationships with them, requires significant time and resources. As the complexity of LiveVox’s products and its third-party relationships increases, the management of those relationships and the negotiation of contractual terms sufficient to protect its rights and limit its potential liabilities will become more complicated. LiveVox also licenses technology from certain third parties. Certain of these agreements permit either party to terminate all or a portion of the relationship without cause at any time and for any reason. If one of these agreements is terminated by the other party, it would have to find an alternative source or develop new technology itself, which could preclude, limit or delay its ability to offer its products or certain product features to its customers and could result in increased expense and harm its business. LiveVox’s inability to successfully manage and maintain these complex relationships or negotiate sufficient and favorable contractual terms could harm LiveVox’s business.

LiveVox has established, and plans to continue to increase, a network of master agents, referral agents and other third-party selling partners to sell its products. Its failure to effectively develop, manage, and maintain this network could materially harm its revenues.

LiveVox has established, and is continuing to increase, its network of master sales agents, referral agents and other third-party selling partners which provide sales leads to LiveVox for new customers. These selling partners sell, or may in the future decide to sell, products and/or solutions for LiveVox’s competitors. LiveVox’s competitors may be able to cause its current or potential selling partners to favor their products over LiveVox’s products, either through financial incentives, technological innovation, product features or performance, or by offering a broader array of services to these selling partners or otherwise, which could reduce the effectiveness of LiveVox’s use of these selling partners. If LiveVox fails to maintain relationships with its current selling partners, fails to develop relationships with new selling partners, fails to manage, train, or provide appropriate incentives to its existing selling partners, or if its selling partners are not successful in their sales efforts, sales of its products may decrease or not grow at an appropriate rate and its operating results could be harmed. Additionally, in order to effectively utilize its selling partners, LiveVox must enhance its systems, develop specialized marketing materials and invest in educating selling partners regarding its systems and product offerings. LiveVox’s failure to accomplish these objectives could limit its success in marketing and selling its products.

In addition, identifying new selling partners and negotiating and documenting relationships with them requires significant time and resources. As the complexity of LiveVox’s products and its selling partner relationships increases, the management of those relationships and the negotiation of contractual terms sufficient to protect its rights and limit its potential liabilities will become more complicated. LiveVox’s inability to successfully manage these complex relationships or negotiate sufficient contractual terms could harm its business.

Adverse economic conditions may harm LiveVox’s business.

LiveVox’s business depends on the overall demand for cloud contact center software solutions and on the economic health of its current and prospective customers. In addition to the United States, LiveVox plans to market and may sell its products in international markets in the future. If economic conditions, including currency exchange rates, in these areas and other key potential markets for its solution remain uncertain or

 

27


Table of Contents

deteriorate, customers may delay or reduce their contact center and overall information technology spending. If LiveVox’s customers or potential customers experience economic hardship, this could reduce the demand for its products, delay and lengthen sales cycles, lower prices for its products, and lead to slower growth or even a decline in its revenues, operating results and cash flows.

Data security incidents could harm LiveVox’s reputation, cause it to modify business practices and otherwise adversely affect business and subject it to liability.

LiveVox is dependent on information technology systems and infrastructure to operate. In the ordinary course of business, LiveVox will collect, store, process and transmit large amounts of information, including, for example, information about its customers, its customers’ clients or other information treated by its customers as confidential. LiveVox will need to be able to do so in a secure manner to maintain the confidentiality, integrity and availability of such information. LiveVox’s obligations under applicable laws, regulations, contracts, industry standards, self-certifications, and other documentation may include maintaining the confidentiality, integrity and availability of personal information in its possession or control and maintaining reasonable and appropriate security safeguards as part of an information security program. These obligations create potential legal liability to regulators, business partners, customers, and other relevant stakeholders and also impact the attractiveness of its products to existing and potential customers.

All information technology operations are inherently vulnerable to inadvertent or intentional security breaches, incidents, attacks and exposures. Vulnerabilities can be exploited from inadvertent or intentional actions of LiveVox’s employees, third-party vendors, business partners, or by malicious third parties. Attacks of this nature are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives (including, but not limited to, industrial espionage) and expertise, including organized criminal groups, “hacktivists,” nation states and others.

Although LiveVox has, and may in the future, implement remote working protocols and offer work-issued devices to certain employees, the actions of employees while working remotely may have a greater effect on the security of its systems and the personal data it processes, including for example by increasing the risk of compromise to systems or data arising from employees’ combined personal and private use of devices, accessing LiveVox systems or data using wireless networks that LiveVox does not control, or the ability to transmit or store company-controlled data outside of the LiveVox secured network. Although many of these risks are not unique to the remote working environment, they have been heightened by the dramatic increase in the numbers of its employees who have been and are continuing to work from home as a result of government requirements or guidelines and internal policies that have been put in place in response to the COVID-19 pandemic.

In addition to the threat of unauthorized access or acquisition of sensitive or personal information, other threats could include the deployment of harmful malware, ransomware attacks, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information. LiveVox’s systems likely experience directed attacks on at least a periodic basis that are intended to interrupt its operations; interrupt its customers’ ability to access the LiveVox platform; extract money from LiveVox; and/or obtain its data (including without limitation user or employee personal information or proprietary information). Although LiveVox has implemented certain security measures, systems, processes, and safeguards intended to protect its information technology systems and data from such threats and mitigate risks to its systems and data, LiveVox cannot be certain that threat actors will not have a material impact on LiveVox systems or products in the future. LiveVox safeguards intended to prevent or mitigate certain threats may not be sufficient to protect its information technology systems and data due to the developing sophistication and means of attack in the threat landscape. In addition, third parties may attempt to fraudulently induce employees or users to disclose information in order to gain access to its data or its users’ data. Recent developments in the threat landscape include an increased number of cyber extortion and ransomware attacks, with increases in the amount of ransom demands and the sophistication and variety of ransomware techniques and methodology.

 

28


Table of Contents

Significant disruptions of third-party vendors’ and/or commercial partners’ information technology systems or other similar data security incidents could adversely affect LiveVox’s business operations and/or result in the loss, misappropriation, and/or unauthorized access, use or disclosure of, or the prevention of access to, sensitive or personal information, which could harm its business. In addition, information technology system disruptions, whether from attacks on LiveVox’s technology environment or from computer viruses, natural disasters, terrorism, war and telecommunication and electrical failures, could result in a material disruption of its product development and business operations.

There is no way of knowing for certain whether LiveVox has experienced any data security incidents that have not been discovered. While LiveVox has no reason to believe that it has experienced a data security incident that it has not discovered, attackers have become very sophisticated in the way they conceal their unauthorized access to systems, and many companies that have been attacked are not aware that they have been attacked. Any event that leads to unauthorized access, use or disclosure of sensitive or personal information, including, but not limited to, personal information regarding LiveVox customers or LiveVox customers’ customers, could disrupt LiveVox’s business, harm its reputation, compel it to comply with applicable federal and/or state breach notification laws and foreign law equivalents, subject it to time consuming, distracting and expensive litigation, regulatory investigation and oversight, mandatory corrective action, require it to verify the correctness of database contents, or otherwise subject it to liability under laws, regulations and contractual obligations, including those that protect the privacy and security of personal information. This could result in increased costs to LiveVox and result in significant legal and financial exposure and/or reputational harm. Such incidents could also cause interruptions to the products it provides, degrade the user experience, or cause customers to lose confidence in its products.

Applicable data privacy and security laws may also obligate LiveVox to employ security measures that are appropriate to the nature of the data it collects and processes and, among other factors, the risks attendant to data processing activities in order to protect personal information from unauthorized access or disclosure, or accidental or unlawful destruction, loss, or alteration. LiveVox has implemented security measures that it believes are appropriate, but a regulator could deem the security measures not to be appropriate given the lack of prescriptive measures in certain data protection laws. Given the evolving nature of security threats and evolving safeguards, LiveVox cannot be sure that its chosen safeguards will protect against security threats to its business including the personal data that it processes. Even security measures that are appropriate, reasonable, and/or in accordance with applicable legal requirements may not be able to fully protect LiveVox’s information technology systems and the data contained in those systems, or LiveVox data that is contained in third parties’ systems. Moreover, certain data protection laws impose on LiveVox responsibility for its employees and third parties that assist with aspects of its data processing. LiveVox’s employees’ or third parties’ intentional, unintentional, or inadvertent actions may increase its vulnerability or expose it to security threats, such as phishing attacks, and LiveVox may remain responsible for successful access, acquisition or other disclosure of its data despite the quality and legal sufficiency of its security measures.

Any failure or perceived failure by LiveVox or its vendors or business partners to comply with privacy, confidentiality or data security-related legal or other obligations to third parties, or any security incidents or other unauthorized access events that result in the unauthorized access, release or transfer of sensitive information, which could include personal information, may result in governmental investigations, enforcement actions, regulatory fines, litigation, or public statements against LiveVox by advocacy groups or others. They could also cause third parties, including current and potential customers or partners, to lose trust in LiveVox, including for example perceiving its platform, system or networks as less desirable. LiveVox could also be subject to claims by third parties that it has breached privacy- or confidentiality-related obligations, which could materially and adversely affect its business and prospects.

 

29


Table of Contents

The markets in which LiveVox participates involve numerous competitors and are highly competitive, and if LiveVox does not compete effectively, its operating results could be harmed.

The market for contact center solutions is highly competitive. LiveVox currently competes with large legacy technology vendors that offer on-premise contact center systems, such as Avaya and Cisco, and legacy on-premise software companies, such as Aspect Software and Genesys (including through its acquisition of Interactive Intelligence). These legacy technology and software companies are increasingly supplementing their traditional on-premise contact center systems with competing cloud offerings, through a combination of acquisitions, partnerships and in-house development. Additionally, LiveVox competes with vendors that historically provided other contact center services and technologies and expanded to offer cloud contact center software such as NICE inContact. LiveVox also faces competition from many other contact center service providers including Five9, Talkdesk and Seranova, as well as vendors offering unified communications and contact center solutions. In addition, Amazon and Twilio have introduced solutions aimed at companies who wish to build their own contact centers with in-house developers. In addition, CRM vendors are increasingly offering features and functionality that were traditionally provided by contact center providers. CRM vendors also continue to partner with contact center service providers to provide integrated solutions and may, in the future, acquire competitive contact center service providers. These factors could harm LiveVox’s revenue and results of operations.

LiveVox’s actual and potential competitors may enjoy competitive advantages over it, including greater name recognition, longer operating histories and larger marketing budgets, as well as greater financial or technical resources. With the introduction of new technologies and market entrants, LiveVox expects competition to continue to intensify in the future. LiveVox’s recent, and any future, acquisitions will subject it to new competitors and cause it to face additional and different competition in the markets served by these businesses.

Some of LiveVox’s competitors can devote significantly greater resources than it can to the development, promotion and sale of their products and services and many have the ability to initiate or withstand substantial price competition. Current or potential competitors may also be acquired by third parties with significantly greater resources. In addition, many of LiveVox’s competitors have stronger name recognition, longer operating histories, established relationships with customers, more comprehensive product offerings, larger installed bases and major distribution agreements with consultants, system integrators and other third-party selling partners. LiveVox’s competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their product offerings or resources and ability to compete. If LiveVox’s competitors’ products, services or technologies become more accepted than LiveVox’s products, if they are successful in bringing their products or services to market earlier than LiveVox, or if their products or services are less expensive or more technologically capable than LiveVox’s, LiveVox’s revenues could be harmed. Pricing pressures and increased competition could result in reduced sales and revenues, reduced margins and loss of, or a failure to maintain or improve, LiveVox’s competitive market position, any of which could harm its business.

If LiveVox’s existing customers terminate their product subscriptions or reduce their product subscriptions and related usage, LiveVox’s revenues and gross margins will be harmed and it will be required to spend more money to grow its customer base.

LiveVox expects to continue to derive a significant portion of its revenues from existing customers. As a result, retaining its existing customers is critical to LiveVox’s future operating results. With limited exceptions, LiveVox offers annual and multiple-year contracts to its customers. Additional products can be provisioned on limited notice. Product subscriptions and related usage by LiveVox’s existing customers may decrease if:

 

   

customers are not satisfied with its products, prices or the functionality of its products;

 

   

the stability, performance or security of its products are not satisfactory;

 

   

the U.S. or global economy declines;

 

30


Table of Contents
   

its customers’ business declines due to the loss of customers, industry cycles, seasonality, business difficulties or other reasons;

 

   

its customers favor products offered by other contact center providers, particularly as competition continues to increase;

 

   

alternative technologies, products or features emerge or gain popularity that it does not provide; or

 

   

its customers or potential customers experience financial difficulties.

If LiveVox’s existing customers’ product subscriptions and related usage decrease or are terminated, it will need to spend more money to acquire new customers and still may not be able to maintain its existing level of revenues. LiveVox incurs significant costs and expenses, including sales and marketing expenses, to acquire new customers, and those costs and expenses are an important factor in determining its profitability. There can be no assurance that its efforts to acquire new customers will be successful.

The loss of one or more of LiveVox’s key customers, or a failure by LiveVox to renew its product subscription agreements with one or more of its key customers, could harm LiveVox’s ability to market its products.

LiveVox relies on its reputation and recommendations from key customers in order to market and sell its products. The loss of any of its key customers, or a failure of some of them to renew or to continue to recommend its products, could have a significant impact on its revenues, reputation and its ability to obtain new customers. In addition, acquisitions of its customers could lead to cancelation of its contracts with those customers, thereby reducing the number of its existing and potential customers and key reference customers.

LiveVox customers may fail to comply with the terms of their agreements, necessitating action by LiveVox to collect payment, or may terminate their subscriptions for its products.

If customers fail to pay LiveVox under the terms of its agreements or fail to comply with the terms of its agreements, including compliance with regulatory requirements and intellectual property terms, it may terminate customers, lose revenue, be unable to collect amounts due to it, be subject to legal or regulatory action and incur costs in enforcing the terms of its contracts, including litigation. Some of its customers may seek bankruptcy protection or other similar relief and fail to pay amounts due to it, seek reimbursement for amounts already paid, or pay those amounts more slowly, which could harm its operating results, financial position and cash flow.

LiveVox sells its products to larger enterprises that can require longer sales cycles, longer and more costly implementation periods, and more configuration and integration services or customized features and functions that LiveVox may not offer, any of which could delay the time until revenue is recognized from these customers or prevent these sales from ever occurring, all of which could harm LiveVox’s revenue growth rates and profitability.

As LiveVox continues to target its sales efforts at larger enterprises, it faces higher costs, longer sales cycles and longer and more costly implementation periods and less predictability in closing sales. These larger enterprises typically require more configuration and integration services which increases LiveVox’s upfront investment in sales and deployment efforts with no guarantee that these customers will subscribe to additional LiveVox products or subscribe to its products at all. Furthermore, with larger enterprises, LiveVox must provide a higher level of education regarding the use and benefits of its products to a broader group of people in order to generate a sale. As a result of these factors, LiveVox must devote a significant amount of sales support and professional services resources to individual customers and prospective customers, thereby increasing the cost and time required to complete sales. LiveVox’s typical sales cycle for larger enterprises is six to twelve months, but can be significantly longer, and its average sales cycle may increase as sales to larger enterprises continue to grow in proportion to its overall new sales. In addition, many of LiveVox’s customers that are larger enterprises initially deploy its products to support only a portion of their contact center agents. LiveVox’s success depends,

 

31


Table of Contents

in part, on its ability to increase the number of agent seats and the number of products utilized by these larger enterprises over time and LiveVox incurs additional sales and marketing expenses in these efforts. There is no guarantee that these customers will purchase additional products from LiveVox or increase the number of agent seats for which it subscribes. If LiveVox does not expand its initial relationships with larger enterprises, the return on its investments in sales, marketing and implementation for these customers will decrease and LiveVox’s business may suffer.

Because a significant percentage of LiveVox’s revenue is recurring from existing customers, downturns or upturns in new sales will not be immediately reflected in its operating results and may be difficult to discern.

LiveVox generally recognizes revenue from customers monthly as services are delivered. As a result, the vast majority of the revenue it reports in each quarter is derived from existing customers. Consequently, a decline in new product subscriptions in any single quarter will likely have only a small impact on its revenue results for that quarter. However, the cumulative impact of such declines could negatively impact its business and results of operations in future quarters. Accordingly, the effect of significant downturns in sales and market acceptance of its products, and potential changes in its pricing policies or renewal rates, will typically not be reflected in its results of operations until future periods. LiveVox also may be unable to adjust its cost structure to reflect the changes in revenue, resulting in lower margins and earnings. In addition, its subscription model makes it difficult for it to rapidly increase its revenue through additional sales in any period, as revenue from new customers will be recognized over time as services are delivered. Moreover, many of LiveVox’s customers initially deploy its products to support only a portion of their contact center agents and, therefore, it may not generate significant revenue from these new customers at the outset of their relationship, if at all. Any increase to LiveVox’s revenue and the value of these existing customer relationships will only be reflected in its results of operations as revenue is recognized, and if and when these customers increase the number of agent seats and the number of components of its products they deploy over time.

LiveVox relies on third-party telecommunications and internet service providers to provide its products, including connectivity to its cloud contact center software, and any failure by these service providers to provide reliable services could cause it to lose customers and subject it to claims for credits or damages, among other things.

LiveVox relies on services from third-party telecommunications providers in order to provide services to its customers and their customers, including telephone numbers. In addition, LiveVox depends on its internet bandwidth suppliers to provide uninterrupted and error-free service through their networks. LiveVox exercises little control over these third-party providers, which increases its vulnerability to problems with the services they provide.

When problems occur, it may be difficult to identify the source of the problem. Service disruption or outages, whether caused by LiveVox’s service, the products or services of LiveVox’s third-party service providers, or LiveVox’s customers’ or their customers’ equipment and systems, may result in loss of market acceptance of its products and any necessary repairs or other remedial actions may force it to incur significant costs and expenses.

If any of these service providers fail to provide reliable services, suffer outages, degrade, disrupt, increase the cost of or terminate the services that LiveVox and its customers depend on, LiveVox may be required to switch to another service provider. Delays caused by switching LiveVox’s technology to another service provider, if available, and qualifying this new service provider could materially harm its customer relationships, business, financial condition and operating results. Further, any failure on the part of third-party service providers to achieve or maintain expected performance levels, stability and security could harm LiveVox’s relationships with its customers, cause it to lose customers, result in claims for credits or damages, increase its costs or the costs incurred by its customers, damage its reputation, significantly reduce customer demand for its products and seriously harm its financial condition and operating results.

 

32


Table of Contents

LiveVox’s customers rely on internet service providers to provide them with access and connectivity to LiveVox’s cloud contact center software, and changes in how internet service providers handle and charge for access to the internet could materially harm LiveVox’s customer relationships, business, financial condition and operations results.

LiveVox’s customers must have access to broadband internet access services in order to use its products and certain of its offerings require substantial capacity to operate effectively. In the United States, internet access services are provided by relatively few companies that, depending on the geographic area, have market power over such offerings. It is possible that these companies could charge LiveVox, its customers, or both fees to guarantee a service amount of capacity, or for quality of broadband internet access services, advantage themselves or LiveVox’s competitors by degrading, disrupting, limiting, or otherwise restricting the use of their infrastructure to support LiveVox’s services. Notably, some of the largest providers of broadband internet access services have committed to not engage in acts that would impede LiveVox’s customers’ broadband internet access services from accessing products or services like LiveVox’s but, depending on the facts, there may be no law that prohibits such providers from doing so. However, these providers likely have the ability to increase LiveVox’s rates, LiveVox’s customers’ rates, or both for broadband internet access services which may increase the cost of LiveVox’s products making its products less competitive or decreasing LiveVox’s profit margins.

In 2018, the Federal Communications Commission or FCC released an order repealing rules that would have prevented broadband internet access providers from degrading, disrupting or otherwise restricting LiveVox’s and LiveVox’s customers’ broadband internet access services. The FCC’s 2018 repeal was largely upheld by the D.C. Circuit Court of Appeals in a decision issued in October 2019. That same court rejected the FCC’s attempt to categorically preempt states from adopting their own network neutrality requirements. While this may mean that states and localities are free to adopt rules stricter than those than the FCC adopted allowing states or localities to prohibit providers of broadband internet access services from blocking, degrading or otherwise restricting such services to LiveVox and its customers, that issue was not specifically before the court at the time of the appeal so it remains unclear as to what kinds of regulations states and localities may be able to adopt with respect to the practices of providers of broadband internet access services. At this time, LiveVox cannot predict whether the change in administration as a result of the 2020 presidential election and change in FCC leadership will result in a change of the FCC’s rules with respect to these issues.

As LiveVox considers approaches for expanding internationally, government regulation protecting the non- discriminatory provision of internet access may be nascent or non-existent. In those markets where regulatory safeguards against unreasonable discrimination are nascent or non-existent and where local network operators possess substantial market power, LiveVox could experience anti-competitive practices that could impede its growth, cause it to incur additional expenses or otherwise harm its business. Future regulations or changes in laws and regulations or their existing interpretations or applications could also hinder LiveVox’s operational flexibility, raise compliance costs and result in additional liabilities for LiveVox, which may harm its business.

LiveVox depends on data centers operated by third parties and public cloud providers and any disruption in the operation of these facilities could harm its business.

LiveVox hosts its products at data centers owned and operated by third party providers and located in Oregon, Virginia, Ohio, and Montreal, Canada. Any failure or downtime in one of LiveVox’s data center facilities could affect a significant percentage of its customers. LiveVox does not control the operation of these facilities. The owners of its data center facilities have no obligation to renew their agreements with LiveVox on commercially reasonable terms, or at all. If it is unable to renew these agreements on commercially reasonable terms, or if one of its data center operators is acquired, closes, suffers financial difficulty or is unable to meet LiveVox’s growing capacity needs, LiveVox may be required to transfer its servers and other infrastructure to new data center facilities, and it may incur significant costs and service interruptions in connection with doing so.

The data centers within which LiveVox hosts its products are subject to various points of failure. Problems with cooling equipment, generators, uninterruptible power supply, routers, switches, or other equipment, could

 

33


Table of Contents

result in service interruptions for its customers as well as equipment damage. These data centers are subject to disasters such as earthquakes, floods, fires, hurricanes, acts of terrorism, sabotage, break-ins, acts of vandalism and other events, which could cause service interruptions or the operators of these data centers to close their facilities for an extended period of time or permanently. The destruction or impairment of any of these data center facilities could result in significant downtime for LiveVox’s products and the loss of customer data. Because LiveVox’s ability to attract and retain customers depends on it providing customers with highly reliable service, even minor interruptions in its service could harm LiveVox’s business, revenues and reputation. Additionally, in connection with the continuing expansion of LiveVox’s existing data center facilities, there is an increased risk that service interruptions may occur as a result of server addition, relocation or other issues.

These data centers are also subject to increased power costs. LiveVox may not be able to pass on any increase in power costs to its customers, which could reduce its operating margins.

LiveVox has little or no control over public cloud providers. Any disruption of the public cloud or any failure of the public cloud providers to effectively design and implement sufficient security systems or plan for increases in capacity could, in turn, cause delays or disruptions in LiveVox’s products. In addition, using the public cloud presents a variety of additional risks, including risks related to sharing the same computing resources with others, reliance on public cloud providers’ authentication, security, authorization and access control mechanisms, a lack of control over the public cloud’s redundancy and security systems and fault tolerances, and a reduced ability to control data security and privacy.

LiveVox’s plans to establish public cloud-based data centers for its international operations may be unsuccessful and may present execution and competitive risks.

LiveVox may seek to establish new public cloud deployments in the future to facilitate its platform in certain international markets. LiveVox may partner with a third-party to develop, test and deploy its technology to offer a full stack of products on the public cloud in certain international markets. If LiveVox is successful in the deployment of its technology to the public cloud, it may expand its public cloud deployments to facilitate its platform in the U.S. and in international markets. LiveVox’s public cloud-based platform offering is critical to developing and providing its products to its customers, scaling its business for future growth, accurately maintaining data and otherwise operating its business. Infrastructure buildouts on the public cloud are complex, time-consuming and may involve substantial expenditures. In addition, the implementation of public cloud-based data centers involves risks inherent in the conversion to a new system, including loss of information and potential disruption to LiveVox’s normal operations. Even once LiveVox implements public cloud-based data centers, it may discover deficiencies in the design, implementation or maintenance of the system that could materially harm its business.

Shifts over time or from quarter-to-quarter in the mix of sizes or types of organizations that purchase LiveVox’s products or changes in the components of its products purchased by its customers could affect its gross margins and operating results.

LiveVox’s strategy is to sell its products to both smaller and larger organizations. LiveVox’s gross margins can vary depending on numerous factors related to the implementation and use of its products, including the features and number of agent seats purchased by its customers and the level of usage required by its customers. Sales to larger organizations may also entail longer sales cycles and more significant selling efforts and expense. Selling to smaller customers may involve smaller contract sizes, fewer opportunities to sell additional services, a higher likelihood of contract terminations, lower returns on sales and marketing expense, fewer potential agent seats and greater credit risk and uncertainty. If the mix of organizations that purchase its products, or the mix of product components purchased by its customers, changes unfavorably, LiveVox’s revenues and gross margins could decrease and its operating results could be harmed.

 

34


Table of Contents

LiveVox plans to expand its international operations, which exposes it to significant risks.

To date, LiveVox has not generated significant revenues outside of the U.S. However, LiveVox may seek to grow its international presence in the future. The future success of its business may depend, in part, on its ability to expand its operations and customer base to other countries. Operating in international markets requires significant resources and management attention and will subject it to regulatory, economic, and political risks that are different from those in the U.S. In addition, in order to effectively market and sell its products in international markets, LiveVox could be required to localize its products, including the language in which its products are offered, which will increase its costs, could result in delays in offering its products in these markets and may decrease the effectiveness of LiveVox’s sales efforts. Due to LiveVox’s limited experience with international operations and developing and managing sales and distribution channels in international markets, its international expansion efforts may not be successful.

Sales to customers outside the United States or with international operations and LiveVox’s international sales efforts and operations support expose it to risks inherent in international sales and operations.

An element of LiveVox’s growth strategy is to expand its international sales efforts and develop a worldwide customer base. Because of LiveVox’s limited experience with international sales, its international expansion may not be successful and may not produce the return on investment it expects. To date, LiveVox has realized only a small portion of its revenues from customers outside the United States, with approximately 5% and 5% of its revenue for the year ended December 31, 2020 and the three months ended March 31, 2021, respectively, derived from customers with a billing address outside of the United States.

LiveVox’s international subsidiaries employ workers primarily in India and Colombia. Operating in international markets requires significant resources and management attention and subjects it to intellectual property, regulatory, economic and political risks that are different from those in the United States. As LiveVox increases its international sales efforts it will face risks in doing business internationally that could harm its business, including:

 

   

the need to establish and protect LiveVox’s brand in international markets;

 

   

the need to localize and adapt LiveVox’s products for specific countries, including translation into foreign languages and associated costs and expenses;

 

   

difficulties in staffing and managing foreign operations, particularly hiring and training qualified sales and service personnel;

 

   

the need to implement and offer customer care in various languages;

 

   

different pricing environments, longer sales and accounts receivable payment cycles and collections issues;

 

   

weaker protection for intellectual property and other legal rights than in the U.S. and practical difficulties in enforcing intellectual property and other rights outside of the U.S.;

 

   

privacy and data protection laws and regulations that are complex, expensive to comply with and may require that customer data be stored and processed in a designated territory;

 

   

increased risk of piracy, counterfeiting and other misappropriation of LiveVox’s intellectual property in its locations outside the U.S.;

 

   

new and different sources of competition;

 

   

general economic conditions in international markets;

 

   

fluctuations in the value of the U.S. dollar and foreign currencies, which may make LiveVox’s products more expensive in other countries or may increase its costs, impacting its operating results when translated into U.S. dollars;

 

35


Table of Contents
   

compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including employment, tax, telecommunications and telemarketing laws and regulations;

 

   

increased risk of international telecom fraud;

 

   

laws and business practices favoring local competitors;

 

   

compliance with laws and regulations applicable to foreign operations and cross border transactions, including the Foreign Corrupt Practices Act, the U.K. Bribery Act and other anti-corruption laws, supply chain restrictions, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on LiveVox’s ability to sell its products in certain foreign markets, and the risks and costs of non-compliance;

 

   

increased financial accounting and reporting burdens and complexities;

 

   

restrictions or taxes on the transfer of funds;

 

   

adverse tax consequences; and

 

   

unstable economic and political conditions and potential accompanying shifts in laws and regulations.

These risks could harm LiveVox’s international operations, increase its operating costs and hinder its ability to grow its international business and, consequently, its overall business and results of operations.

In addition, compliance with laws and regulations applicable to LiveVox’s international operations increases its cost of doing business outside the United States. LiveVox may be unable to keep current with changes in foreign government requirements and laws as they change from time to time, which often occurs with minimal or no advance notice. Failure to comply with these regulations could harm its business. In many countries outside the United States, it is common for others to engage in business practices that are prohibited by LiveVox’s internal policies and procedures or United States or international regulations applicable to it. Although LiveVox has implemented policies and procedures designed to ensure compliance with these laws and policies, there can be no assurance that all of its employees, contractors, strategic partners and agents will comply with these laws and policies. Violations of laws or key control policies by LiveVox’s employees, contractors, strategic partners or agents could result in delays in revenue recognition, financial reporting misstatements, fines, delays in filing financial reports required as a public company, penalties, or prohibitions on selling its products, any of which could harm its business.

LiveVox has a history of losses and it may be unable to achieve or sustain profitability.

LiveVox incurred a net loss of $4.6 million, a net loss of $6.9 million and net income of $1.9 million for the years ended December 31, 2020, December 31, 2019 and December 31, 2018, respectively. LiveVox incurred a net loss of $4.2 million and a net loss of $0.6 million for the three months ended March 31, 2021 and March 31, 2020, respectively. As of March 31, 2021, LiveVox had an accumulated deficit of $29.0 million. These losses and LiveVox’s accumulated deficit reflect the substantial investments it has made, and continues to make, to develop its products and acquire new customers, among other expenses. LiveVox expects the dollar amount of its costs and expenses to increase in the future as revenue increases, although at a slower rate. LiveVox expects its losses to continue for the foreseeable future as it continues to invest in research and development and expand its business. In addition, as a public company, LiveVox will incur significant legal, accounting and other expenses. LiveVox’s historical or recent growth in revenues is not necessarily indicative of its future performance. Accordingly, there is no assurance that LiveVox will achieve profitability in the future or that, if LiveVox does become profitable, it will sustain profitability.

LiveVox’s recent growth makes it difficult to evaluate and predict its current business and future prospects.

While LiveVox has been in existence for over twenty years, much of its growth has occurred in recent years. LiveVox’s recent growth may make it difficult for investors to evaluate its current business and its future

 

36


Table of Contents

prospects. LiveVox has encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in rapidly changing industries, including increasing and unforeseen expenses as it continues to grow its business.

LiveVox’s ability to forecast its future operating results is limited and subject to a number of uncertainties, including its ability to predict revenue and expense levels and plan for and model future growth. LiveVox has encountered and will continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as the risks and uncertainties described in this prospectus. If its assumptions regarding these risks and uncertainties, which it uses to plan its business, are incorrect or change due to adjustments in its markets or its competitors and their product offerings, or if it does not address these risks successfully, its operating and financial results could differ materially from its expectations and its business could suffer.

Development of LiveVox’s AI products to make agents more efficient and improve customer experience may not be successful and may result in reputational harm and LiveVox’s future operating results could be materially harmed.

LiveVox plans to increase and provide its customers with AI-powered applications, including conversational virtual agents, agent assistance and business insights. While LiveVox aims for its AI-powered applications to make agents more efficient and improve customer experience, its AI models may not achieve sufficient levels of accuracy. In addition, it may not be able to acquire sufficient training data or its training data may contain biased information. Furthermore, the costs of AI technologies, such as speech recognition and natural language processing, may be too high for market adoption. LiveVox’s competitors or other organizations may incorporate AI features into their products more quickly or effectively and their AI features may achieve higher market acceptance than LiveVox’s, which may result in LiveVox failing to recoup its investments in developing AI-powered applications. Should any of these items or others occur, LiveVox’s ability to compete, its reputation and operating results may be materially and adversely affected.

If LiveVox’s products fail, or are perceived to fail, to perform properly or if they contain technical defects, LiveVox’s reputation could be harmed, LiveVox’s market share may decline, and/or LiveVox could be subject to product liability claims.

LiveVox’s products may contain undetected errors or defects that may result in failures or otherwise cause its products to fail to perform in accordance with customer expectations and contractual obligations. Moreover, LiveVox’s customers could incorrectly implement or inadvertently misuse its products, which could result in customer dissatisfaction and harm the perceived utility of LiveVox’s products and its brand. Because LiveVox’s customers use its products for mission-critical aspects of their business, any real or perceived errors or defects in, or other performance problems with, its products may damage LiveVox’s customers’ businesses and could significantly harm its reputation. If that occurs, LiveVox could lose future sales, or its existing customers could cancel their use of its products, seek payment credits, seek damages against LiveVox, or delay or withhold payment to it, which could result in reduced revenues, an increase in LiveVox’s provision for uncollectible accounts and service credits, an increase in collection cycles for accounts receivable, and harm LiveVox’s financial results. Customers also may make indemnification or warranty claims against LiveVox, which could result in significant expense and risk of litigation. Performance problems could result in loss of market share, reputational harm, failure to achieve market acceptance and the diversion of development resources.

Any product liability, intellectual property, warranty or other claims against LiveVox could damage its reputation and relationships with its customers and could require LiveVox to spend significant time and money in litigation or pay significant settlements or damages. Although LiveVox maintains general liability insurance, including coverage for errors and omissions, this coverage may not be sufficient to cover liabilities resulting from such claims. Also, LiveVox’s insurers may disclaim coverage. LiveVox’s liability insurance also may not continue to be available to LiveVox on reasonable terms, in sufficient amounts, or at all. Any contract or product liability claims successfully brought against LiveVox would harm its business.

 

37


Table of Contents

LiveVox is subject to many hazards and operational risks that can disrupt its business, some of which may not be insured or fully covered by insurance.

LiveVox’s operations are subject to many hazards inherent in the cloud contact center software business, including:

 

   

damage to third-party and its infrastructure and data centers, related equipment and surrounding properties caused by earthquakes, hurricanes, tornadoes, floods, fires and other natural disasters, explosions and acts of terrorism;

 

   

security breaches resulting in loss or disclosure of confidential customer and customer data and potential liability to customers and non-customer third parties for such losses on disclosures; and

 

   

other hazards that could also result in suspension of operations, personal injury and even loss of life.

These risks could result in substantial losses and the curtailment or suspension of LiveVox’s operations. For example, in the event of a major earthquake, hurricane, tropical storm, flooding or severe weather or catastrophic events such as fire, power loss, telecommunications failure, cyber-attack, war or terrorist attack impacting LiveVox’s headquarters or any of the data centers it uses, LiveVox may be unable to continue its operations and may endure system and service interruptions, reputational harm, delays in product development, breaches of data security and loss of critical data, any of which could harm its business and operating results.

LiveVox is not insured against all claims, events or accidents that might occur. If a significant accident or event occurs that is not fully insured, if it fails to recover all anticipated insurance proceeds for significant accidents or events for which it is insured, or if it or its data center providers fail to reopen facilities damaged by such accidents or events, LiveVox’s operations and financial condition could be harmed. In addition to being denied coverage under existing insurance policies, LiveVox may not be able to maintain or obtain insurance of the type and amount LiveVox desires at reasonable rates.

The contact center software market is subject to rapid technological change, and LiveVox must develop and sell incremental and new features and products in order to maintain and grow its business.

The contact center software market is characterized by rapid changes in customer requirements, frequent introductions of new and enhanced products and features and continuing and rapid technological advancement. To compete successfully, LiveVox must continue to devote significant resources to design, develop, deploy and sell new and enhanced contact center products, applications and features that provide increasingly higher capabilities, performance and stability at lower cost. If LiveVox is unable to develop or acquire new features for its existing products or new applications that achieve market acceptance or that keep pace with technological developments, its business would be harmed. For example, LiveVox is focused on enhancing the reliability, features and functionality of its contact center products to enhance its utility to its customers, particularly larger customers, with complex, dynamic and global operations. The success of these enhancements depends on many factors, including timely development, introduction and market acceptance, as well as its ability to transition LiveVox’s existing customers to these new products, applications and features. Failure in this regard may significantly impede LiveVox’s revenue growth. In addition, because LiveVox’s products are designed to operate on a variety of systems, it needs to continuously modify and enhance its solution to keep pace with changes in hardware, operating systems, the increasing trend toward multichannel communications and other changes to software technologies. LiveVox may not be successful in developing or acquiring these modifications and enhancements or bringing them to market in a timely fashion. Furthermore, uncertainties about the timing and nature of new network platforms or technologies, or modifications to existing platforms or technologies, could delay introduction of changes and updates to LiveVox’s products and increase LiveVox’s research and development expenses. Any failure of LiveVox’s products to operate effectively, including with future network platforms and technologies, could reduce the demand for LiveVox’s products, result in customer dissatisfaction and harm its business.

 

38


Table of Contents

Failure to comply with laws and regulations could harm LiveVox’s business and its reputation.

LiveVox’s business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, environmental laws, privacy or data security laws, consumer protection laws, calling and texting, anti- bribery laws, import/export controls, federal securities laws and tax laws and regulations. In certain jurisdictions, these regulatory requirements may be more stringent than those in the United States and in other circumstances these requirements may be more stringent in the United States. The application and interpretation of the laws and regulations to which LiveVox and its products are subject are often uncertain, particularly given the new and rapidly evolving industry in which it operates. Because these laws and regulations have continued to develop and evolve rapidly, it is possible that LiveVox may not be, or may not have been, compliant with all applicable laws or regulations. Noncompliance with applicable regulations or requirements could subject LiveVox to investigations, sanctions, mandatory recalls, notification obligations, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions, lawsuits or other claims and LiveVox may have to restructure its products, create new products, and otherwise adapt to the changing legal and regulatory landscape. If any governmental sanctions, fines or penalties are imposed, or if LiveVox does not prevail in any civil or criminal litigation, its business, operating results, financial condition and reputation could be harmed. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could further harm LiveVox’s business, operating results, financial condition and reputation.

Alleged or actual failure by LiveVox, its competitors, or other companies to comply with the constantly evolving legal and contractual environment surrounding calling or texting, and the governmental or private enforcement actions related thereto, could harm LiveVox’s business, financial condition, results of operations and cash flows.

The legal and contractual environment surrounding calling and texting is constantly evolving. In the United States, two federal agencies, the FTC and the FCC, and various states have laws and regulations including, at the federal level, the Telephone Consumer Protection Act of 1991, that restrict the placing of certain telephone calls and texts by means of automatic telephone dialing systems, prerecorded or artificial voice messages and fax machines. In addition, there are a series of federal and state laws that regulate marketing calls and texts. Some of these laws require companies to institute processes and safeguards to comply with applicable restrictions. The legal interpretation of certain of the requirements of these laws has been in dispute before the courts and federal agencies, including for example as part of pending FCC proceedings and a case currently pending before the U.S. Supreme Court. Some of these laws, where a violation is established, can be enforced by the FTC, FCC, State Attorneys General, or private party litigants. In these types of actions and depending on the circumstances, the plaintiff may seek damages, statutory penalties, or other fees.

LiveVox has designed its products to comply with applicable law. To the extent that its products are viewed by customers or potential customers as less functional, or more difficult to deploy or use, because of its products’ compliance features, LiveVox may lose market share to competitors that do not include similar compliance safeguards. LiveVox’s contractual arrangements with its customers who use its solution to place calls also expressly require the customers to comply with all such laws and to indemnify LiveVox for any failure to do so.

Although LiveVox takes steps to confirm that the use of its products complies with applicable laws, it is possible that the FTC, FCC, private litigants or others may attempt to hold LiveVox’s customers, or LiveVox as a software solution provider, responsible for alleged violations of these laws. To the extent any court finds that the products violated a controlling legal standard, LiveVox could face indemnification demands from its customers for costs, fees and damages with respect to calls placed using those products. It also is possible that LiveVox may not successfully enforce or collect upon LiveVox’s contractual indemnities from its customers. Defending such suits can be costly and time-consuming and could result in fines, damages, expenses and losses. Additionally, these laws, and any changes to them or the applicable interpretation thereof, that further restrict calling or texting

 

39


Table of Contents

consumers, adverse publicity regarding the alleged or actual failure by companies, including LiveVox, its customers and competitors, or other third parties, to comply with such laws or governmental or private enforcement actions related thereto, could result in a reduction in the use of its products by its customers and potential customers, which could harm LiveVox’s business, financial condition, results of operations and cash flows.

On December 12, 2018, the FCC issued an order concluding that certain text messaging services qualify as an “information service” under federal law and not a “telecommunications service.” The regulatory significance to LiveVox is that the FCC’s decision gives wireless carriers additional flexibility to manage messaging traffic on their network, including by blocking traffic. Such blocking efforts by carriers may make it more difficult for LiveVox’s customers to use messaging services provided by LiveVox as a part of its overall communications and outreach solution for its customers. Thus, although short message service (“SMS”) comprises only a small portion of LiveVox’s revenue base, its future availability as an effective tool for communication and outreach for LiveVox’s customers and their customers remains uncertain and could cause its products to be less valuable to customers and potential customers.

We are potentially subject to taxation related risks in multiple jurisdictions, and changes in U.S. tax laws, in particular, could have a material adverse effect on our business, cash flow, results of operations or financial condition.

We are a U.S.-based company potentially subject to tax in multiple U.S. and non-U.S. tax jurisdictions. Significant judgment will be required in determining our global provision for income taxes, deferred tax assets or liabilities and in evaluating our tax positions on a worldwide basis. While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.

Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. In particular, on December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “Tax Act”), which significantly revises the Code. The Tax Act was recently amended by the CARES Act. Certain provisions of the Tax Act may adversely affect us. The Tax Act requires complex computations that were not previously provided for under U.S. tax law. Furthermore, the Tax Act requires significant judgments to be made in interpretation of the law and significant estimates in the calculation of the provision for income taxes. Additional interpretive guidance may be issued by the U.S. Internal Revenue Service, the U.S. Department of the Treasury or another governing body that may significantly differ from the Company’s interpretation of the Tax Act, which may result in a material adverse effect on our business, cash flow, results of operations or financial condition. In addition, governmental tax authorities are increasingly scrutinizing the tax positions of companies. Many countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business. If U.S. or non-U.S. tax authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.

The current Presidential Administration has proposed changes to tax law that would, among other things, increase the corporate tax rate, impose a 15% minimum tax on corporate book income, and strengthen the GILTI regime imposed by the Tax Act while eliminating related tax exemptions. Any such tax changes could materially increase the amount of taxes we would be required to pay, which could adversely affect our business, financial condition and operating results. For example, increases in the corporate tax rate may adversely impact our cash flow, which would in turn negatively impact our performance and liquidity. Other changes that may be enacted in the future, including changes to tax laws enacted by state or local governments in jurisdictions in which we operate, could result in further changes to state and local taxation and materially adversely affect our financial position and results of operations.

 

40


Table of Contents

LiveVox’s ability to offer products outside the United States is subject to different regulatory and taxation requirements which may be complicated and uncertain.

When LiveVox expands the sale and implementation of its solutions internationally, LiveVox will be subject to additional regulations, taxes, surcharges and fees. Compliance with these new complex regulatory requirements differ from country to country and are frequently changing and may impose substantial compliance burdens on LiveVox’s business. At times, it may be difficult to determine which laws and regulations apply and LiveVox may discover that it is required to comply with certain laws and regulations after having provided services for some time in that jurisdiction, which could subject LiveVox to liability for taxes, fees and penalties on prior revenues, and LiveVox may be subject to conflicting requirements. Additionally, as LiveVox expands internationally, there is risk that governments will regulate or impose new or increased taxes or fees on the types of products that LiveVox provides. Any such additional regulation or taxes could decrease the value of LiveVox’s international expansion and harm its results of operations.

Requirements for LiveVox or its suppliers to pay federal or state universal service fund contribution amounts and assessments (either LiveVox paying directly or paying through its suppliers in the form of surcharges) for other telecommunications funds or taxes could impact the desirability and profitability of its products.

Applicable requirements for LiveVox to pay to its suppliers, or in some instances to pay directly, federal or state universal service surcharge amounts and assessments for other telecommunications funds or taxes, continue to change over time and may impact the desirability and profitability of its products. For example, interconnected voice over internet protocol (“VoIP”) providers are generally required to contribute to the federal Universal Service Fund, and the contribution rates have increased in recent years. In addition, if LiveVox is unable to continue to pass some or all of the cost of these surcharges and assessments to its customers, LiveVox’s profit margins will decrease. LiveVox’s surcharge and assessment obligations, whether made directly or indirectly, may significantly increase in the future, due to new interpretations by governing authorities, governmental budget pressures, changes in its business model or products or other factors.

If LiveVox does not comply with federal or state laws and regulations, to the extent applicable, it could be subject to enforcement actions, forfeitures, loss of licenses/authorizations and possibly restrictions on its ability to operate or offer certain of LiveVox’s products.

LiveVox’s business is impacted by federal and state laws and regulations. Additionally, LiveVox is registered with the FCC and intends to begin providing interconnected VoIP services in the second half of 2021. As an interconnected VoIP provider, LiveVox will be subject to certain existing or potential FCC regulations. If LiveVox does not comply with federal or state laws and regulations, to the extent applicable to its interconnected VoIP or other services, it could be subject to enforcement actions, forfeitures, behavioral or operational remedies, and possibly restrictions on its ability to operate or offer certain of LiveVox’s products. Any enforcement action, elements of which may become public, would hurt LiveVox’s reputation in the industry, could impair LiveVox’s ability to sell its products to customers and could harm LiveVox’s business and results of operations.

Some of the regulations to which LiveVox may be subject or which otherwise may impact its business (in whole or in part) include:

 

   

the Communications Assistance for Law Enforcement Act, or CALEA, which requires covered entities to assist law enforcement in undertaking electronic surveillance;

 

   

contributions to federal or state Universal Service funds;

 

   

payment of annual FCC regulatory fees based on LiveVox’s interstate and international revenues;

 

   

rules pertaining to access to LiveVox’s products by people with disabilities and contributions to the

Telecommunications Relay Services;

 

41


Table of Contents
   

911 and E911 requirements;

 

   

TRACED Act requirements; and

 

   

FCC rules regarding Customer Proprietary Network Information, or CPNI, which prohibit LiveVox from using such information without customer approval, subject to certain exceptions.

If LiveVox does not comply with any current or future rules or regulations that apply to LiveVox’s business, it could be subject to additional and substantial fines and penalties (including those mentioned above), LiveVox may have to restructure its products, exit certain markets, accept lower margins or raise the price of its products, any of which could harm its business and results of operations.

Privacy concerns and domestic or foreign laws and regulations may reduce the demand for LiveVox’s solution, increase its costs and harm its business.

In order to provide its products, LiveVox receives and stores personal data from customers, and it may also collect and store personal data from or about potential customers and website visitors. LiveVox may share personal data with its service providers, such as cloud or other technical services providers, as necessary to provide the products. Various federal, state, and foreign laws and regulations as well as industry standards and contractual obligations govern the processing of personal data. The regulatory environment for the collection and use of personal data by online service providers is evolving in the United States and internationally. Privacy groups and government bodies, including the FTC, state attorneys general, the European Commission and European data protection authorities, have increasingly scrutinized privacy issues with respect to personal data, and LiveVox expects such scrutiny to continue to increase. The United States and foreign governments have enacted and are considering laws and regulations that could significantly impact the processing of personal data. These include laws such as the EU GDPR and the CCPA.

LiveVox has made and continues to make changes to its data protection compliance program to address applicable legal requirements. It also continues to monitor the implementation and evolution of data protection regulations, but if LiveVox is deemed to not be compliant with applicable law, it may be subject to significant fines and penalties (such as restrictions on personal data processing) and its business may be harmed. LiveVox also may be bound by additional, more stringent contractual obligations relating to its collection, use, and disclosure of personal, financial, and other data.

Additionally, some laws might require LiveVox to disclose proprietary or confidential aspects of its products in a manner that compromises the effectiveness of its products or that enables LiveVox’s competitors or bad actors to gain insight into the operation of LiveVox’s technology, enabling them to copy or circumvent LiveVox’s products and thereby reducing the value of its technology.

LiveVox publishes privacy policies, notices and other documentation regarding LiveVox’s collection, processing, use and disclosure of personal information and/or other confidential information. Although LiveVox endeavors to comply with published policies, certifications, and documentation, it may at times fail to do so or may be perceived to have failed to do so. Moreover, despite LiveVox’s efforts, it may not be successful in achieving full compliance if its employees or vendors fail to comply with LiveVox’s published policies, certifications, and documentation.

The costs of compliance with, and other burdens imposed by, such laws and regulations that are applicable to LiveVox and the businesses of its customers may limit the use and adoption of LiveVox’s products and reduce overall demand for its products. Also, failure to comply with such laws may lead to significant fines, penalties or other regulatory liabilities, such as orders or consent decrees forcing LiveVox or its customers to modify business practices, and reputational damage or third-party lawsuits for any noncompliance with such laws. LiveVox’s business could be harmed if legislation or regulations are adopted, interpreted or implemented in a

 

42


Table of Contents

manner that is inconsistent from country to country and inconsistent with LiveVox’s current policies and practices, or those of its customers.

Furthermore, privacy and data protection concerns may cause consumers to resist providing the personal data or other types of protected data that may be subject to laws and regulations that is necessary to allow LiveVox’s customers to use its products effectively. Even the perception of privacy concerns, whether or not valid, may inhibit market adoption of LiveVox’s products in certain industries or countries.

The European Union’s GDPR may continue to increase LiveVox’s costs and the costs of its customers to operate, limit the use of LiveVox’s products or change the way it operates, expose LiveVox to substantial fines and penalties if it fails to comply, and has led to similar laws being enacted in other jurisdictions.

On May 25, 2018, the EU adopted the GDPR. The GDPR replaced the EU Data Protection Directive, also known as Directive 95/46/EC, and is intended to harmonize data protection laws throughout the EU by applying a single data protection law that is binding throughout each member state. LiveVox and many of its customers are subject to the GDPR based upon LiveVox’s processing of personal data collected from EU data subjects, such as its processing of personal data of LiveVox’s customers in the EU.

The GDPR enhances data protection obligations for processors and controllers of personal data, including, for example, expanded disclosures about how personal information is to be used, limitations on retention of information, mandatory data breach notification requirements and onerous new obligations on services providers. Non-compliance with the GDPR can trigger steep fines of up to €20 million or 4% of total worldwide annual turnover, whichever is higher. The member states of the EU were tasked under the GDPR to enact certain implementing legislation that would add to or further interpret the GDPR requirements and this additional implementing legislation potentially extends LiveVox’s obligations and potential liability for failing to meet such obligations.

Given the breadth and depth of changes in data protection obligations, LiveVox’s compliance with the GDPR’s requirements will continue to require time, resources and review of the technology and systems LiveVox uses to satisfy the GDPR’s requirements. LiveVox has ongoing procedures to maintain GDPR compliance. LiveVox continues to deliver product features that enhance its data management and security in support of GDPR compliance.

While LiveVox does not regularly transfer high volumes of personal data outside of the European Economic Area (“EEA”), there may be circumstances in which ex-EEA transfers of personal data, including to countries which European regulators do not recognize as providing an adequate level of protection for personal data, are necessary to provide products to its customers or otherwise operate its business. In the event LiveVox conducts any such transfers of personal data, it may have to implement new or additional processes, transfer mechanisms, or tools to comply with the GDPR or other applicable data protection laws, which may result in increased operational costs. Additionally, there are certain unsettled legal issues regarding transferring personal data outside of the EEA, the resolution of which may impact LiveVox’s ability to transfer personal data from the EEA to the United States.

Given the complexity of operationalizing the GDPR, the maturity level of proposed compliance frameworks and the relative lack of guidance in the interpretation of its numerous requirements, LiveVox and its customers are at risk of enforcement actions taken by EU data protection authorities or litigation from consumer advocacy groups acting on behalf of data subjects. This risk will likely remain until there is more guidance on the GDPR, including as to implementing legislation enacted by the member states and enforcement actions taken by various data protection authorities.

The implementation of the GDPR has led other jurisdictions to amend, or propose legislation to amend, their existing data protection laws to align with the requirements of the GDPR with the aim of obtaining an adequate

 

43


Table of Contents

level of data protection to facilitate the transfer of personal data from the EU. Accordingly, the challenges LiveVox faces in the EU will likely also apply to other jurisdictions outside the EU that adopt laws similar in construction to the GDPR or regulatory frameworks of equivalent complexity.

The CCPA and its amendments could increase LiveVox’s costs and the costs of its customers to operate, limit the use of its products or change the way LiveVox operates, and expose LiveVox to substantial fines and class action risk if it fails to comply, and lead to similar laws being enacted in other states.

In 2018, the State of California adopted the CCPA. The CCPA applies to certain for-profit entities doing businesses in California. LiveVox and its qualifying customers were required to comply with these requirements before the CCPA became effective on January 1, 2020.

The CCPA establishes a new privacy framework for covered businesses by creating an expanded definition of personal information and creating new data privacy rights for consumers in the State of California. As required by the statute, entities doing business in California have new and ongoing disclosure obligations to consumers for whom they hold or process personal data. Businesses must also provide consumers with the right to dictate how their personal information is used and shared. Complying with these obligations will involve continued expenditures that could increase as more consumers exercise their rights under the statute.

The CCPA also creates a new and potentially severe statutory damages framework for violations of its provisions. The California Attorney General can enforce the CCPA by seeking statutory penalties for failure to comply with the act. For businesses that fail to implement reasonable security procedures, the CCPA also creates a private right of action for consumers whose personal data is subject to certain data breaches. This private right of action has the potential to create significant class action liability for businesses, like LiveVox’s, that operate in California. To protect against these new risks, it may be necessary to change LiveVox’s insurance programs or take other business steps. The CCPA has been amended multiple times, and the California Office of the Attorney General has published final regulations to implement portions of the CCPA and is currently reviewing modifications to those regulations. Additionally, in November 2020, California voters passed the California Privacy Rights Act (the “CPRA”) ballot initiative, which introduces significant amendments to the CCPA. The CPRA will go into effect on January 1, 2023 and new CPRA regulations are expected to be introduced. The potential effects of the CCPA amendments, Attorney General implementation, and CPRA are far-reaching and may require LiveVox to modify its data processing practices and policies and to incur substantial costs and expenses in an effort to comply. LiveVox is continuing to assess the impact of these developments on its business as additional information and guidance becomes available.

Changes in government regulation applicable to the collections industry or any failure of LiveVox or its customers to comply with existing regulations could result in the suspension, termination or impairment of the ability of LiveVox or its customers to conduct business, may require the payment of significant fines by LiveVox or its customers and could require changes in customer’s businesses that would reduce the need for its products, or require other significant expenditures.

Many of LiveVox’s customers operate in the collections industry, which is heavily regulated under various federal, state, and local laws, rules, and regulations. In particular, the Consumer Financial Protection Bureau (“CFPB”), FTC, state attorneys general and other regulatory bodies have the authority to impose certain restrictions on the collections industry and to investigate a variety of matters, including consumer complaints against debt collection companies, and can bring enforcement actions and seek monetary penalties, consumer restitution, and injunctive relief. If LiveVox, or its customers fail to comply with applicable laws, rules, and regulations, including, but not limited to, identity theft, privacy, data security, the use of automated dialing equipment, laws related to consumer protection, debt collection, and laws applicable to specific types of debt, it could result in the suspension or termination of the ability of LiveVox’s customers to conduct collection operations, which in turn would adversely affect LiveVox.

 

44


Table of Contents

Additionally, new laws, rules or regulations, including changes to permissible communications in connection with consumer debt collection enacted by the CFPB, could limit the ability of certain of LiveVox’s customers to use its products or could potentially expose LiveVox or its customers to fines or penalties, which could reduce LiveVox’s revenues, or increase its expenses, and consequently adversely affect its business, financial condition and operating results. In addition, new federal, state or local laws or regulations, or changes in the ways these rules or laws are interpreted or enforced, could limit the activities of LiveVox or its customers in the future and could significantly increase the cost of regulatory compliance. Compliance with this extensive regulatory framework is expensive and labor-intensive. Any of the foregoing could have an adverse effect on LiveVox’s business, financial condition and operating results.

LiveVox’s ability to continue to enhance its products is dependent on adequate research and development resources. If LiveVox is not able to adequately fund its research and development efforts, it may not be able to compete effectively and its business and operating results may be harmed.

In order to remain competitive, LiveVox must devote significant and increasing resources to developing new product offerings, features, and enhancements to its existing cloud contact center software, which will increase its research and development and operating expenses. LiveVox’s research and development expenses totaled $20.2 million, $16.6 million and $12.4 million for the years ended December 31, 2020, December 31, 2019 and December 31, 2018, respectively. LiveVox’s research and development expenses totaled $6.2 million and $4.7 million for the three months ended March 31, 2021 and March 31, 2020, respectively. Maintaining adequate research and development personnel and resources to meet the demands of the market is essential. If LiveVox is unable to develop products, applications or features internally due to constraints, such as high employee turnover, insufficient cash, inability to hire sufficient research and development personnel or a lack of other research and development resources, LiveVox may miss market opportunities. Furthermore, many of LiveVox’s competitors have greater financial resources and expend considerably greater amounts on their research and development programs than LiveVox does, and those that do not may be acquired by larger companies that would allocate greater resources to LiveVox’s competitors’ research and development programs. LiveVox’s failure to devote adequate research and development resources or compete effectively with the research and development programs of LiveVox’s competitors could harm its business.

If LiveVox is unable to maintain the compatibility of its software with other products and technologies, its business would be harmed.

LiveVox’s customers often integrate LiveVox’s products with their business applications. These third-party providers or their partners could alter their products so that LiveVox’s products no longer integrates well with them, or they could delay or deny LiveVox’s access to technology releases that allow LiveVox’s to adapt its products to integrate with their products in a timely fashion. If LiveVox cannot adapt its products to changes in complementary technology deployed by its customers, it may significantly impair LiveVox’s ability to compete effectively.

LiveVox’s business could be harmed if its customers are not satisfied with the professional services or technical support provided by LiveVox or its partners.

LiveVox’s business depends on its ability to satisfy its customers, not only with respect to its products, but also with the professional services and technical support that are required for LiveVox’s customers to implement and use its products to address their business needs. Professional services and technical support may be performed by LiveVox’s own staff or, in a select subset of cases, by third parties. Some of LiveVox’s professional services offerings have negative margins. Accordingly, any increase in sales of professional services could harm LiveVox’s gross margins and operating results. LiveVox will need to continue to expand and optimize its professional services and technical support in order to keep up with new customer installations and ongoing service, which takes time and expense to implement. Identifying and recruiting qualified service

 

45


Table of Contents

personnel and training them in LiveVox’s products is difficult and competitive and requires significant time, expense and attention. LiveVox may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services. LiveVox also may be unable to modify the format of its support services or change its pricing to compete with changes in support services provided by its competitors. Increased customer demand for these services, without corresponding revenues, could increase LiveVox’s costs and harm its operating results. If a customer is not satisfied with the deployment and ongoing services performed by LiveVox or a third party, it could lose customers, miss opportunities to expand its business with these customers, incur additional costs, or suffer reduced (including negative) margins on LiveVox’s service revenue, any of which could damage LiveVox’s ability to grow its business. In addition, negative publicity related to LiveVox’s professional services and technical support, regardless of its accuracy, may damage LiveVox’s business by affecting its ability to compete for new business with current and prospective customers.

LiveVox depends on its senior management team, and the loss of one or more key employees or an inability to attract and retain highly skilled executives and other employees could harm its business and results of operations.

LiveVox’s success depends, in part, upon the performance and continued services of its executive officers and senior management team. If LiveVox’s executive leadership team fails to perform effectively or if it fails to attract or retain its key executives or senior management, its business, financial condition or results of operations could be harmed. LiveVox also relies on its leadership team in the areas of research and development, marketing, sales, services, and general and administrative functions, and on mission-critical individual contributors. The loss of one or more of LiveVox’s executive officers or key employees could seriously harm its business. LiveVox currently does not maintain key person life insurance policies on any of its employees.

To execute LiveVox’s growth plan, it must attract and retain highly qualified personnel and it may incur significant costs (including stock-based compensation expense) to do so. Competition for these personnel is intense, especially for senior executives, engineers highly experienced in designing and developing cloud software and for senior sales personnel. LiveVox has, from time to time, experienced, and it expects to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. LiveVox invests significant time and expense in training its employees, which increases their value to competitors who may seek to recruit them and increases LiveVox’s costs. If LiveVox fails to attract new personnel or fails to retain and motivate its current personnel, particularly its executive officers and senior management team, LiveVox’s business and future growth prospects would be harmed. Many of the companies with which it competes for experienced personnel have greater resources than LiveVox has. If LiveVox hires employees from competitors or other companies, their former employers may attempt to assert that these employees or LiveVox have breached legal obligations, resulting in a diversion of LiveVox’s time and resources and, potentially, damages.

Volatility or lack of performance in the trading price of LiveVox’s Common Stock may also affect LiveVox’s ability to attract and retain qualified personnel because job candidates and existing employees often emphasize the value of the stock awards they receive in connection with their employment when considering whether to accept or continue employment. If the perceived value of LiveVox’s stock awards is low or declines, it may harm LiveVox’s ability to recruit and retain highly skilled employees.

If LiveVox fails to grow its marketing capabilities and develop widespread brand awareness cost effectively, its business may suffer.

LiveVox’s ability to increase its customer base and achieve broader market acceptance of its cloud contact center software products will depend to a significant extent on LiveVox’s ability to expand its marketing operations. LiveVox plans to continue to dedicate significant resources to its marketing programs, including internet advertising, digital marketing campaigns, social media, trade shows, industry events, and co-marketing with strategic partners. The effectiveness of LiveVox’s internet advertising is as yet unproven, and there is existing competition for key search terms. All of these marketing efforts will continue to require LiveVox to

 

46


Table of Contents

invest significant financial and other resources. LiveVox’s business will be seriously harmed if its efforts and expenditures do not generate a proportionate increase in revenue.

In addition, LiveVox believes that developing and maintaining widespread awareness of its brand in a cost- effective manner is critical to achieving widespread acceptance of LiveVox’s products and attracting new customers. Brand promotion activities may not generate customer awareness or increase revenues, and even if they do, any increase in revenues may occur after the expense has been incurred and may not offset the costs and expenses of building LiveVox’s brand. If LiveVox fails to successfully promote, maintain and protect its brand, or incurs substantial costs and expenses, it may fail to attract or retain customers necessary to realize a sufficient return on its brand-building efforts, or to achieve the widespread brand awareness that is critical to increasing customer adoption of its products.

LiveVox may not be able to secure additional financing on favorable terms, or at all, to meet its future capital needs.

LiveVox may require additional capital to respond to business opportunities, challenges, acquisitions, a decline in sales, increased regulatory obligations or unforeseen circumstances and may engage in equity or debt financings or enter into credit facilities. LiveVox has a substantial amount of debt. As of March 31, 2021, LiveVox had approximately $56.1 million in principal amount outstanding under the term loan. See Note 8 to LiveVox’s consolidated financial statements included elsewhere in this prospectus.

Any debt financing obtained by LiveVox in the future could cause it to incur additional debt service expenses and could include restrictive covenants relating to its capital raising activities and other financial and operational matters, which may make it more difficult for it to obtain additional capital and pursue business opportunities and could be secured by all of LiveVox’s assets. If LiveVox raises additional funds through further issuances of equity or convertible debt securities, its existing stockholders could suffer significant dilution in their percentage ownership of LiveVox, and any new equity securities it issues could have rights, preferences and privileges senior to those of holders of LiveVox’s Common Stock. If LiveVox is unable to obtain adequate financing or financing on terms satisfactory to it when LiveVox requires it, LiveVox’s ability to continue to grow and support its business and to respond to business challenges could be significantly limited.

LiveVox may acquire other companies or technologies or be the target of strategic transactions, which could divert its management’s attention, result in additional dilution to LiveVox’s stockholders and otherwise disrupt LiveVox’s operations and harm its operating results.

LiveVox may acquire or invest in businesses, applications or technologies that it believes could complement or expand its products, enhance its technical capabilities or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management, and cause LiveVox to incur various costs and expenses in identifying, investigating and pursuing acquisitions, whether or not they are consummated. LiveVox may not be able to identify desirable acquisition targets or be successful in entering into an agreement with any particular target.

To date, the growth in LiveVox’s business has been primarily organic, and LiveVox has limited experience in acquiring other businesses. With respect to any future acquisitions, LiveVox may not be able to successfully integrate acquired personnel, operations and technologies, or effectively manage the combined business following the acquisition. LiveVox also may not achieve the anticipated benefits from these or any future acquisitions due to a number of factors, including:

 

   

inability to integrate or benefit from acquisitions in a profitable manner;

 

   

unanticipated costs or liabilities associated with the acquisition, including legal claims arising from the activities of companies or businesses LiveVox acquires;

 

47


Table of Contents
   

acquisition-related costs;

 

   

difficulty converting the customers of the acquired business to LiveVox’s products and contract terms, including due to disparities in the revenue, licensing, support or professional services model of the acquired company;

 

   

difficulty integrating the accounting systems, operations and personnel of the acquired business;

 

   

difficulties and additional costs and expenses associated with supporting legacy products and the hosting infrastructure of the acquired business;

 

   

diversion of management’s attention from other business concerns;

 

   

harm to its existing relationships with its partners and customers as a result of the acquisition;

 

   

the loss of its or the acquired business’s key employees;

 

   

diversion of resources that could have been more effectively deployed in other parts of its business; and

 

   

use of substantial portions of its available cash to consummate the acquisition.

In addition, a significant portion of the purchase price of companies and businesses LiveVox acquires may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. If LiveVox’s acquisitions do not yield expected returns, it may be required to take charges to its operating results based on this impairment assessment process, which could harm its results of operations.

Acquisitions could also result in dilutive issuances of equity securities, the use of LiveVox’s available cash, or the incurrence of additional debt to fund such acquisitions, which could harm its operating results. If an acquired business fails to meet LiveVox’s expectations, its operating results, business and financial condition could suffer.

In addition, third parties may be interested in acquiring LiveVox. LiveVox will continue to consider, evaluate and negotiate such transactions as it deems appropriate. Such potential transactions may divert the attention of management, and cause LiveVox to incur various costs and expenses in investigating, evaluating and negotiating such transactions, whether or not they are consummated.

Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect LiveVox’s reported operating results.

U.S. GAAP is subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in accounting standards or practices can have a significant effect on LiveVox’s reported results and may even affect LiveVox’s financial statements issued before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and will occur in the future. Changes to existing rules or the questioning of current practices may harm LiveVox’s reported financial results or the way it accounts for or conducts its business.

For example, in May 2014, the FASB issued new revenue recognition rules under Accounting Standard Codification 606 — Revenue from Contracts with Customers (“ASC 606”), which included a single set of rules and criteria for revenue recognition to be used across all industries. LiveVox adopted this standard in January 2019 using a full retrospective method. With the adoption of this standard, the timing of LiveVox’s commission expense recognition changed, which caused fluctuations in LiveVox’s operating results. See Note 2 to LiveVox’s consolidated financial statements included elsewhere in this prospectus for more information.

Further, in February 2016, the FASB issued new rules for leases under the Accounting Standard Codification 842 — Leases (“ASC 842”), which requires a lessee to recognize assets and liabilities for both

 

48


Table of Contents

finance, previously known as capital, and operating leases with lease terms of more than 12 months. LiveVox adopted this standard on January 1, 2020 using a modified retrospective method. With the adoption of this standard, LiveVox recognized right-of-use, or ROU, assets and lease liabilities for operating leases. See Note 2 to LiveVox’s December 31, 2020 consolidated financial statements included elsewhere in this prospectus for more information.

The application of any new accounting guidance is, and will be, based on all information available to LiveVox as of the date of adoption and up through subsequent interim reporting, including transition guidance published by the standard setters. However, the interpretation of these new standards may continue to evolve as other public companies adopt the new guidance and the standard setters issue new interpretative guidance related to these rules. As a result, changes in the interpretation of these rules could result in material adjustments to LiveVox’s application of the new guidance, which could have a material effect on its results of operations and financial condition. Additionally, any difficulties in implementing these pronouncements could cause LiveVox to fail to meet its financial reporting obligations, which could result in regulatory discipline, cessation or disruption of trading in LiveVox’s Common Stock and harm investors’ confidence in LiveVox.

In addition, certain factors have in the past and may in the future cause LiveVox to defer recognition of revenues. For example, the inclusion in LiveVox’s customer contracts of non-standard terms, such as acceptance criteria, could require the deferral of revenue. To the extent that such contracts become more prevalent in the future LiveVox’s revenue may be impacted.

Because of these factors and other specific requirements under U.S. GAAP for revenue recognition, LiveVox must have precise terms and conditions in its arrangements in order to recognize revenue when it delivers its products or performs its professional services. Negotiation of mutually acceptable terms and conditions can extend its sales cycle, and LiveVox may accept terms and conditions that do not permit revenue recognition at the time of delivery.

LiveVox may not be able to utilize a significant portion of its net operating loss, and under the existing federal corporate tax rates such tax benefits will be of less value, which could harm LiveVox’s profitability and financial condition.

As of March 31, 2021, LiveVox had federal and state net operating loss carryforwards due to prior period losses of $35.8 million and $73.8 million, respectively, with varying expirations from 2024 through 2041. If LiveVox is unable to generate sufficient taxable income to utilize its net operating loss carryforwards, they could expire unused and be unavailable to offset future income tax liabilities, which could harm LiveVox’s profitability and financial condition in future periods.

In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or IRC Sections 382 and 383, LiveVox’s ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if LiveVox experiences an “ownership change.” An IRC Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of LiveVox’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. Subsequent or future issuances or sales of LiveVox’s stock could cause an “ownership change,” which would impose an annual limit on the amount of pre-ownership change net operating loss carryforwards and other tax attributes LiveVox can use to reduce its taxable income, potentially causing those tax attributes to expire unused or to be reduced, and increasing and accelerating LiveVox’s liability for income taxes. It is possible that such an ownership change could materially reduce LiveVox’s ability to use its net operating loss carryforwards or other tax attributes to offset taxable income, which could require LiveVox to pay more income taxes than if LiveVox were able to fully utilize its net operating loss carryforwards and harm its profitability.

 

49


Table of Contents

Legislative and regulatory changes to laws or policies related to loan deferment, forbearance, or forgiveness, including following the recent U.S. presidential election or as a response to COVID-19, could have a material negative impact on the business operations and prospects of certain of LiveVox’s customers and as a result have a negative impact on LiveVox’s business, operations, and financial condition.

Legislative and regulatory changes to laws or policies related to loan deferment, forbearance, or forgiveness, including following the recent U.S. presidential election or as a response to COVID-19, may have a significant impact on LiveVox’s customers’ businesses. For example, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. In compliance with the CARES Act, payments and interest accruals on federal student loans were suspended until September 30, 2020, and subsequent Executive Orders have directed the Department of Education (“ED”) to extend the suspension until September 30, 2021. While the CARES Act applies only to loans owned by the ED, several states announced various initiatives to suspend payment obligations for private student loan borrowers in those states. Additionally, on March 25, 2020, the ED announced that private collection agencies were required to stop making outbound collection calls and sending letters or billing statements to borrowers in default. Moreover, in April 2020, various restrictions around the servicing and collection of private education loans were enacted by certain states. There is additional uncertainty as to the future of student loan forbearance or forgiveness under President Biden’s administration. President Biden has indicated a desire and a willingness to cancel federal student loan debt for certain individuals up to a threshold amount and there have been similar proposals in Congress.

Additionally, the CARES Act allowed borrowers affected by the COVID-19 pandemic to request temporary loan forbearance for federally-backed mortgage loans. Nevertheless, servicers of mortgage loans are contractually bound to advance monthly payments to investors, insurers, and taxing authorities regardless of whether the borrower actually makes those payments. While government-sponsored enterprises, including Fannie Mae and Freddie Mac, recently issued guidance limiting the number of payments a servicer must advance in the case of a forbearance, loan servicers expect that a borrower who has experienced a loss of employment or a reduction of income may not repay the forborne payments at the end of the forbearance period. Additionally, loan servicers are prohibited by the CARES Act from collecting certain servicing related fees, such as late fees, during the forbearance plan period. They are further prohibited from initiating foreclosure and/or eviction proceedings under applicable investor and/or state law requirements.

These legislative and regulatory changes have had, and these and other changes that may be promulgated in the future, may have a negative impact on certain of LiveVox’s customers who service student loans or federally backed mortgage loans. In particular, forgiveness of outstanding loans or a suspension of loan payments and interest accruals may lead to a reduction in the demand for LiveVox’s customers’ business, resulting in a corresponding reduction to LiveVox’s business. Due to the impact of new legislation and regulation, coupled with the additional uncertainty of the new presidential administration’s student loan-related initiatives, LiveVox is not able to estimate the ultimate impact of changes in law on LiveVox’s customers and consequently LiveVox’s financial results, business operations, or strategies. Until the future of loan servicing is decided, LiveVox’s customers in this industry will continue to experience increased uncertainty. LiveVox’s profitability, results of operations, financial condition, cash flows, and future business prospects could be materially and adversely affected as a result.

Many of LiveVox’s customer contracts contain usage-based revenue components that depend upon such customer’s ability to sustain or increase their business activity and such business activity can be subject to the impact of external events beyond the control of LiveVox or such customers, including unexpected weather conditions, political instability or government shutdowns, public health issues (including pandemics and quarantines) or natural disasters. LiveVox’s revenue and profitability could be harmed as a result of any decrease to such customer’s business activity.

Many of LiveVox’s customer contracts contain usage-based revenue components that depend upon such customers’ ability to sustain or increase their business activity. Such customers’ business activity has in the past

 

50


Table of Contents

been and could in the future be subject to the impact of external events beyond the control of such customers or LiveVox, such as unexpected weather conditions, public health issues (including pandemics and quarantines), political instability or government shutdowns or natural disasters. For example, several of LiveVox’s customers had call centers in the Houston area that were completely destroyed or severely damaged by the impact of Hurricane Harvey in 2017, resulting in a negative impact on such customers and a resulting decrease in LiveVox’s revenue from such customers. Additionally, certain of LiveVox’s customers typically increase their collection activities from January through April when many Americans receive federal tax refunds. Any delay in the Internal Revenue Service’s ability to timely process Americans’ federal tax returns and remit refunds to filers, including as a result of COVID-19 precautions or a government shutdown such as the one that occurred in late 2018 and early 2019, has in the past caused and could in the future cause those customers to forgo increases in hiring or usage which could in turn unfavorably impact LiveVox’s revenue and profitability.

LiveVox may be unable to generate sufficient cash flow to satisfy its debt service obligations, which would adversely affect its results of operations and financial condition.

LiveVox’s ability to make scheduled payments on, or to refinance its obligations under, its indebtedness will depend on its future operating performance and on economic, financial, competitive, legislative, regulatory and other factors. Many of these factors are beyond LiveVox’s control. LiveVox can provide no assurance that its business will generate sufficient cash flow from operations or that future borrowings will be available to it in an amount sufficient to enable it to satisfy its obligations under its indebtedness or to fund its other needs. In order for LiveVox to satisfy its obligations under its indebtedness, it must continue to execute its business strategy. If LiveVox is unable to do so, it may need to refinance all or a portion of its indebtedness on or before maturity. LiveVox can provide no assurance that it will be able to refinance any of its indebtedness on commercially reasonable terms or at all.

The terms of LiveVox’s indebtedness could adversely affect its business.

The Credit Agreement contains restrictive covenants that, among others, limit LiveVox’s ability to:

 

   

pay dividends and make distributions and repurchase stock;

 

   

engage in transactions with affiliates;

 

   

create liens;

 

   

incur indebtedness not under the Credit Agreement;

 

   

engage in sale-leaseback transactions;

 

   

make investments;

 

   

make loans and guarantee obligations of other persons;

 

   

amend material agreements and organizational documents and enter into agreement affecting ability to pay dividends;

 

   

maintain or contribute to a defined employee benefit plan or arrangement that is not subject to the laws of the U.S.; and

 

   

sell or dispose of all or substantially all of LiveVox’s assets and engage in specified mergers or consolidations.

In addition, the Credit Agreement contains certain financial covenants, including the maintenance of a consolidated total leverage ratio and a consolidated fixed charge coverage ratio that come into effect in March 2022. LiveVox’s ability to borrow under the revolving facility depends on its compliance with these financial covenants. Events beyond LiveVox’s control, including changes in general economic and business conditions,

 

51


Table of Contents

may affect its ability to meet these financial covenants. LiveVox cannot guarantee that it will meet these financial covenants in the future, or that the lenders will waive any failure to meet these financial covenants.

Any failure to protect LiveVox’s intellectual property rights could impair its ability to protect its proprietary technology and its brand.

LiveVox’s success and ability to compete depend in part upon its intellectual property. As of March 31, 2021, LiveVox’s intellectual property portfolio included four registered U.S. trademarks, three pending trademark applications, and one issued U.S. patent. LiveVox primarily relies on copyright, trade secret and trademark laws, trade secret protection and confidentiality or license agreements with its employees, customers, partners and others to protect its intellectual property rights. The steps LiveVox takes to secure, protect and enforce its intellectual property rights may be inadequate. LiveVox may not be able to obtain any further patents or trademarks, its current patents could be invalidated or its competitors could design their products around LiveVox’s patented technology, and LiveVox’s pending applications may not result in the issuance of patents or trademarks. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights in other countries are uncertain and may afford little or no effective protection of LiveVox’s proprietary technology, and the risk of intellectual property misappropriation may be higher in these countries. Consequently, LiveVox may be unable to prevent its proprietary technology from being infringed or exploited abroad, which could affect LiveVox’s ability to expand into international markets or require costly efforts to protect its technology.

In order to protect its intellectual property rights, LiveVox may be required to spend significant resources to monitor and protect these rights. Litigation brought to protect and enforce its intellectual property rights could be costly, time consuming and distracting to LiveVox’s management and could result in the impairment or loss of LiveVox’s intellectual property. Furthermore, LiveVox’s efforts to enforce its intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of its intellectual property rights. Accordingly, LiveVox may not be able to prevent third parties from infringing upon or misappropriating LiveVox’s intellectual property. LiveVox’s failure to secure, protect and enforce its intellectual property rights could substantially harm the value of LiveVox’s technology, products, brand and business.

LiveVox will likely be subject to third-party intellectual property infringement claims.

There is considerable patent and other intellectual property development activity and litigation in LiveVox’s industry. LiveVox’s success depends upon its not infringing upon the intellectual property rights of others. LiveVox’s competitors, as well as a number of other entities and individuals, may own or claim to own intellectual property relating to LiveVox’s industry.

Certain technology necessary for LiveVox to provide its products may be patented, copyrighted or otherwise protected by other parties either now or in the future. In such case, LiveVox would have to negotiate a license for the use of that technology. LiveVox may not be able to negotiate such a license at a price that is acceptable, or at all. The existence of such a patent, copyright or other protections, or LiveVox’s inability to negotiate a license for any such technology on acceptable terms, could force LiveVox to cease using such technology and offering products incorporating such technology.

Others in the future may claim that LiveVox’s products and underlying technology infringe or violate their intellectual property rights. However, LiveVox may be unaware of the intellectual property rights that others may claim cover some or all of its technology or products. Any claims or litigation could cause LiveVox to incur significant costs and expenses and, if successfully asserted against LiveVox, could require that it pay substantial damages or ongoing royalty payments, require that it refrain from using, manufacturing or selling certain offerings or features or using certain processes, prevent it from offering its products or certain features thereof, or require that LiveVox comply with other unfavorable terms, any of which could harm its business and operating results. LiveVox may also be obligated to indemnify its customers or business partners and pay substantial

 

52


Table of Contents

settlement costs, including royalty payments, in connection with any such claim or litigation and to obtain licenses, which could be costly. Even if LiveVox were to prevail in such a dispute, any litigation regarding its intellectual property could be costly and time consuming and divert the attention of LiveVox’s management and key personnel from its business operations.

Indemnity provisions in various agreements potentially expose LiveVox to substantial liability for intellectual property infringement and other losses.

In the ordinary course of business, LiveVox enters into agreements of varying scope and terms pursuant to which it agrees to indemnify customers, vendors, lessors, business partners and other parties for third-party claims with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, certain claims related to third-party privacy or cyber security breaches or from intellectual property infringement claims made by third parties. Large indemnity payments or damage claims from contractual breach could harm LiveVox’s business, results of operations and financial condition. Although LiveVox often contractually limits its liability with respect to such obligations, LiveVox may still incur substantial liability related to them. Any dispute with a customer with respect to such obligations could be expensive, even if LiveVox ultimately prevails, and could harm LiveVox’s relationship with that customer and other current and prospective customers, reduce demand for its products and harm its business, results of operations and financial condition.

LiveVox employs third-party licensed software for use in or with its products, and the inability to maintain these licenses or errors in the software LiveVox licenses could result in increased costs, or reduced service levels, which could harm LiveVox’s business.

LiveVox’s products incorporate certain third-party software obtained under licenses from other companies. LiveVox anticipates that it will continue to rely on such software from third parties in the future. Although LiveVox believes that there are commercially reasonable alternatives to the third-party software LiveVox currently licenses, this may not be the case, or it may be difficult or costly to transition to other providers. In addition, integration of the software used in LiveVox’s products with new third-party software may require significant work and require substantial investment of LiveVox’s time and resources. To the extent that LiveVox’s products depend upon the successful operation of third-party software in conjunction with its software, any undetected errors or defects in this third-party software could prevent the deployment or impair the functionality of LiveVox’s products, delay new product introductions, result in increased costs, or a failure of LiveVox’s products and injure its reputation. LiveVox’s use of additional or alternative third-party software would require it to enter into license agreements with third parties and to integrate such software to its products.

There can be no assurance that the technology licensed by LiveVox will continue to provide competitive features and functionality or that licenses for technology currently utilized by it or other technology that it may seek to license in the future, including to replace current third-party software, will be available to it at a reasonable cost or on commercially reasonable terms, or at all. Third-party licensors may also be acquired or go out of business, which could preclude LiveVox from continuing to use such technology. The loss of, or inability to maintain, existing licenses could result in lost product features and litigation. The loss of existing licenses could also result in implementation delays or reductions until equivalent technology or suitable alternative products could be developed, identified, licensed and integrated, and could increase LiveVox’s costs and harm its business.

LiveVox’s products utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect its business.

LiveVox’s products include software covered by open source licenses, which may include, for example, free general public use licenses, open source frontend libraries and open source applications. The terms of various open source licenses have not been interpreted by United States courts, and there is a risk that such licenses could

 

53


Table of Contents

be construed in a manner that imposes unanticipated conditions or restrictions on LiveVox’s ability to market its products. By the terms of certain open source licenses, LiveVox could be required to release the source code of its proprietary software, and to make its proprietary software available under open source licenses, if LiveVox combines its proprietary software with open source software in a certain manner. In the event that portions of LiveVox’s proprietary software are determined to be subject to an open source license, it could be required to publicly release the affected portions of its source code, re-engineer all or a portion of its technologies, or otherwise be limited in the licensing of its technologies, each of which could reduce or eliminate the value of LiveVox’s technologies and products. In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of the software. Given the nature of open source software, there is also a risk that third parties may assert copyright and other intellectual property infringement claims against LiveVox based on its use of certain open source software programs. Many of the risks associated with the usage of open source software cannot be eliminated and could harm LiveVox’s business.

Risks Relating to Ownership of Our Securities

The market price of our securities may be volatile and fluctuate substantially, which could result in substantial losses for our investors and may subject us to securities litigation suits.

The market price of our securities may be volatile. The stock market in general and the market for technology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their securities or above the price they paid. The market price for our securities may be influenced by many factors, including:

 

   

the impact of COVID-19 and related changes in base interest rates and significant market volatility on the Company’s business, our industry and the global economy;

 

   

the high level of competition in the cloud contact center industry and the intense competition and competitive pressures from other companies in the industry in which the Company will operate;

 

   

reliance on information systems and the ability to properly maintain the confidentiality and integrity of data;

 

   

the occurrence of cyber incidents or a deficiency in cybersecurity protocols;

 

   

the ability to obtain third-party software licenses for use in or with the Company’s products;

   

changes in financial estimates by us or by any securities analysts who might cover our securities;

 

   

conditions or trends in our industry;

 

   

changes in the market valuations of similar companies;

 

   

stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the pharmaceutical industry;

 

   

publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts;

 

   

announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;

 

   

announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;

 

   

investors’ general perception of our company and our business;

 

   

recruitment or departure of key personnel;

 

   

overall performance of the equity markets;

 

54


Table of Contents
   

trading volume of our securities;

 

   

disputes or other developments relating to intellectual property rights, including patents, litigation matters and our ability to obtain, maintain, defend, protect and enforce patent and other intellectual property rights for our technologies;

 

   

significant lawsuits, including patent or stockholder litigation;

 

   

general political and economic conditions; and

 

   

other events or factors, many of which are beyond our control.

There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.

Our Class A Common Stock and Public Warrants are listed on Nasdaq under the symbols “LVOX” and “LVOXW,” respectively. Our continued eligibility for listing will depend on our compliance with the continued listing standards of Nasdaq and may depend on the number of our shares that are redeemed. If Nasdaq delists our securities from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant negative consequences including:

 

   

limited availability of market quotations for our securities;

 

   

a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of our common stock;

 

   

a limited amount of analyst coverage; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our Class A Stock, Units and/or Public Warrants to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of Class A Stock, Units and/or Public Warrants in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our Class A Stock, Units and/or Public Warrants. In addition, at the closing of the Business Combination, we entered into the Amended and Restated Registration Rights Agreement with certain other stockholders of the Company, including the LiveVox Stockholder. Pursuant to the terms of the Amended and Restated Registration Rights Agreement, (a) any outstanding share of Class A Stock or any other equity security of the Company held by a signatory thereto (besides the Company) as of the Closing Date or thereafter acquired by such holder and (b) any other equity security of the Company issued or issuable with respect to any such share of Common Stock held by such a holder by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise are entitled to registration rights.

The Amended and Restated Registration Rights Agreement also subjects the LiveVox Stockholder, subject to certain exceptions, to be bound by restrictions on the transfer of its Class A Stock acquired pursuant to the Merger Agreement until 180 days after the consummation of the Business Combination.

Certain independent directors of the Company and the SPAC Sponsor also agreed, pursuant to the Share Escrow Agreement, upon the closing of the Business Combination, to place a total of 2,743,750 shares of Class A Stock into an escrow account to be subject to release only if the price of Class A Stock trading on Nasdaq exceeds the following thresholds during the seven-year period following the closing of the Business Combination as follows: 781,250 of such shares will be released if the Volume Weighted Average Share Price equals or exceeds $12.50 per share for 20 of any 30 consecutive trading days; another 781,250 of such shares will

 

55


Table of Contents

be released if the Volume Weighted Average Share Price equals or exceeds $15.00 per share for 20 of any 30 consecutive trading days; and another 1,181,250 of such shares will be released if the Volume Weighted Average Share Price equals or exceeds $17.50 per share for 20 of any 30 consecutive trading days. Any such securities not released during the seven-year period following the closing of the Business Combination will be forfeited and canceled for no consideration.

Pursuant to the Forward Purchase Agreement, Crescent has also agreed to restrictions on the transfer of (i) the shares of Class A Stock purchased by Crescent pursuant to the Forward Purchase Agreement until the earlier of (x) 180 days after the Business Combination or (ii) the warrants purchased by it pursuant to the Forward Purchase Agreement (and the respective Class A Stock underlying such warrants) until 30 days after the consummation of the Business Combination.

In addition, the shares of Class A common stock reserved for future issuance under our equity incentive plans will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable. Our compensation committee of our board of directors may determine the exact number of shares to be reserved for future issuance under our equity incentive plans at its discretion. We are expected to file one or more registration statements on Form S-8 under the Securities Act to register shares of Class A common stock or securities convertible into or exchangeable for shares of Class A common stock issued pursuant to our equity incentive plans. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market.

In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of Class A common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of Class A common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to our stockholders.

Because we do not anticipate paying any cash dividends on our Class A Common Stock in the foreseeable future, capital appreciation, if any, will be your sole source of gains and you may never receive a return on your investment.

We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future. Any decision to declare and pay dividends as a public company in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur. As a result, you may not receive any return on an investment in our securities unless you sell your securities for a price greater than that which you paid for it.

There is no guarantee that our warrants will be in the money at the time they become exercisable, and they may expire worthless.

The exercise price for our warrants, including our Public Warrants, is $11.50 per share of Class A common stock. There is no guarantee that any of our warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless.

 

56


Table of Contents

We may issue additional shares securities without your approval, which would dilute your ownership interests and may depress the market price of our securities.

Pursuant to the 2021 Equity Incentive Plan (the “2021 Plan”) and the Employee Stock Purchase Plan (the “2021 ESPP”), we may issue an aggregate of up to 10% of the fully diluted shares of Class A Common Stock, which amount will be subject to increase from time to time. We may also issue additional shares of Class A Common Stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions or repayment of outstanding indebtedness, without stockholder approval, in a number of circumstances.

The issuance of additional shares or other equity securities of equal or senior rank would have the following effects:

 

   

existing stockholders’ proportionate ownership interest in our company will decrease;

 

   

the amount of cash available per share, including for payment of dividends in the future, may decrease;

 

   

the relative voting strength of each previously outstanding common stock may be diminished; and

 

   

the market price of our securities may decline.

Anti-takeover provisions in our amended and restated certificate of incorporation and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult, and may prevent attempts by our stockholders to replace or remove our current management.

Our amended and restated certificate of incorporation contains provisions that may delay or prevent an acquisition of the company or change in our management. These provisions may make it more difficult for stockholders to replace or remove members of our board of directors. Because the board of directors is responsible for appointing the members of the management team, these provisions could in turn frustrate or prevent any attempt by our stockholders to replace or remove our current management. In addition, these provisions could limit the price that investors might be willing to pay in the future for shares of our Class A Common Stock. Among other things, these provisions include:

 

   

the limitation of the liability of, and the indemnification of, our directors and officers;

 

   

a prohibition on actions by our stockholders except at an annual or special meeting of stockholders;

 

   

a prohibition on actions by our stockholders by written consent; and

 

   

the ability of the board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the board of directors.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”), which prohibits a person who owns 15% or more of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired 15% or more of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. This could discourage, delay or prevent a third party from acquiring or merging with us, whether or not it is desired by, or beneficial to, our stockholders. This could also have the effect of discouraging others from making tender offers for our Class A common stock, including transactions that may be in our stockholders’ best interests. Finally, these provisions establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings. These provisions would apply even if the offer may be considered beneficial by some stockholders. For more information, see the section titled “Description of Securities”.

 

57


Table of Contents

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

 

   

any derivative action or proceeding brought on our behalf;

 

   

any action asserting a breach of fiduciary duty;

 

   

any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; and

 

   

any action asserting a claim against us that is governed by the internal-affairs doctrine or otherwise related to our internal affairs.

To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation further provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions. In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation. This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.

These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could harm our business.

We are an “emerging growth company” and a “smaller reporting company,” and as a result of the reduced reporting requirements applicable to “emerging growth companies” and “smaller reporting companies,” our securities may be less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an “emerging growth company,” we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an “emerging growth company,” we are required to report only two years of financial results and selected financial data compared to three and five years, respectively, for comparable data reported by other public companies. We may take advantage of these exemptions until we are no longer an “emerging growth company.” We could be an “emerging growth company” until December 31, 2025, although circumstances could cause us to lose that status earlier, including if the

 

58


Table of Contents

aggregate market value of our securities held by non-affiliates exceeds $700 million as of any June 30 (the end of our second quarter) before that time, in which case we would no longer be an “emerging growth company” as of the following December 31 (our year-end). Even after we no longer qualify as an “emerging growth company,” we may still qualify as a “smaller reporting company,” which would allow us to continue to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements. We cannot predict if investors will find our securities less attractive because we may rely on these exemptions. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the price of our securities may be more volatile.

If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq. Section 302 of the Sarbanes-Oxley Act requires, among other things, that public companies report on the effectiveness of our disclosure controls and procedures in our quarterly and annual reports and, beginning with our annual report for the year ending 2021, Section 404 of the Sarbanes-Oxley Act requires that we perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting in our Form 10-K filing for that year. This will require that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. To date, we have not been required to test our internal control within a specified period, and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner. In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting in our first annual report required to be filed with the SEC following the date we are no longer an emerging growth company or a smaller reporting company.

If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements. If that were to happen, the market price of our stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. In addition, our securities may not be able to remain listed on Nasdaq or any other securities exchange.

We will incur costs and demands upon our management as a result of complying with the laws and regulations affecting public companies in the U.S., which may harm our business.

As a public company listed in the U.S., we will incur significant additional legal, accounting and other expenses. In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and Nasdaq may increase legal and financial compliance costs and make some activities more time consuming. These laws, regulations and standards are subject to varying interpretations and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from regular business activities to compliance activities. If, notwithstanding our efforts, we fail to comply with new laws, regulations and standards, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

Failure to comply with these rules might also make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or as members of senior management.

 

59


Table of Contents

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline.

We do not currently have and may never obtain research coverage by equity research analysts. Equity research analysts may elect not to provide research coverage of our securities after the closing of this Business Combination, and such lack of research coverage may adversely affect the market price of our securities. In the event we do have equity research analyst coverage, we will not have any control over the analysts or the content and opinions included in their reports. The price of our stock could decline if one or more equity research analysts downgrade our stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our securities’ prices or trading volume to decline.

 

60


Table of Contents

USE OF PROCEEDS

We will not receive any proceeds from the sale of securities by the Selling Shareholders.

We will receive up to an aggregate of approximately $153.3 million from the exercise of the warrants, assuming the exercise in full of all of the warrants for cash. We expect to use the net proceeds from the exercise of the warrants for general corporate purposes. We will have broad discretion over the use of proceeds from the exercise of the warrants. There is no assurance that the holders of the warrants will elect to exercise any or all of such warrants. To the extent that the warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the warrants will decrease.

The Selling Shareholders will pay any underwriting discounts and commissions and expenses incurred by the Selling Shareholders for brokerage, accounting, tax or legal services or any other expenses incurred by the Selling Shareholders in disposing of the securities. We will bear the costs, fees and expenses incurred in effecting the registration of the securities covered by this prospectus, including all registration and filing fees, Nasdaq listing fees and fees and expenses of our counsel and our independent registered public accounting firm.

 

61


Table of Contents

DIVIDEND POLICY

We currently intend to retain all available funds and any future earnings to fund the growth and development of our business. We have never declared or paid any cash dividends on our capital stock. We do not intend to pay cash dividends to our shareholders in the foreseeable future. Investors should not purchase our Common Stock with the expectation of receiving cash dividends.

Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions, and other factors that our board of directors may deem relevant.

 

62


Table of Contents

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Defined terms included below have the same meaning as terms defined and included elsewhere in this prospectus. Unless the context otherwise requires, the “Company” refers to Crescent Acquisition Corp before and at the Closing and to the combined company and its subsidiaries following the Closing. “LiveVox” refers to the business of LiveVox Holdings, Inc. and its subsidiaries prior to the Closing, and “Crescent” refers to Crescent Acquisition Corp prior to the Closing.

The following unaudited pro forma condensed combined balance sheet as of March 31, 2021 and the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 and the three months ended March 31, 2021 present the historical financial statements of Crescent and LiveVox, adjusted to reflect the Business Combination. Crescent and LiveVox shall collectively be referred to herein as the “Companies.” The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.”

The unaudited pro forma condensed combined balance sheet as of March 31, 2021 assumes that the Business Combination was completed on March 31, 2021. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 and for the three months ended March 31, 2021 give pro forma effect to the Business Combination as if it had occurred on January 1, 2020, the beginning of the earliest period presented.

The unaudited pro forma condensed combined financial statements were derived as described below and should be read in conjunction with the financial statements of the Companies and related notes thereto.

 

   

The unaudited pro forma condensed combined balance sheet and statement of operations as of and for the three months ended March 31, 2021 were derived from LiveVox’s unaudited consolidated financial statements as of and for the three months ended March 31, 2021, which is included elsewhere in this prospectus, and Crescent’s unaudited financial statements as of and for the three months ended March 31, 2021, which is incorporated herein by reference.

 

   

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 was derived from LiveVox’s audited consolidated statement of operations and comprehensive loss for the year ended December 31, 2020 and Crescent’s restated audited statement of operations for the year ended December 31, 2020, which are incorporated herein by reference.

On June 18, 2021, LiveVox Holdings, Inc. (formerly known as Crescent Acquisition Corp), a Delaware corporation, consummated the previously announced business combination pursuant to an Agreement and Plan of Merger, dated January 13, 2021, by and among the Company, Function Acquisition I Corp, a Delaware corporation and direct, wholly owned subsidiary of the Company, Function Acquisition II LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of the Company, LiveVox Holdings, Inc., a Delaware corporation, and GGC Services Holdco, Inc., a Delaware corporation, solely in its capacity as the representative, agent and attorney-in-fact of LiveVox TopCo, LLC, a Delaware limited liability company and the sole stockholder of Old LiveVox as of immediately prior to the First Merger, which provided for, among other things, (a) the merger of First Merger Sub with and into Old LiveVox, with Old LiveVox continuing as the surviving corporation, and (b) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Old LiveVox with and into Second Merger Sub, with Second Merger Sub continuing as the surviving entity. In connection with the Business Combination, (a) the Company changed its name to “LiveVox Holdings, Inc.” and (b) Second Merger Sub, as the surviving entity of the Second Merger, changed its name to “LiveVox Intermediate LLC”. As a result of the Business Combination, (a) the Company directly owns all of the equity interests of LiveVox Intermediate and indirectly owns the equity interests of its subsidiaries and (b) the LiveVox Stockholder, the sole stockholder of Old LiveVox prior to the Business Combination, now hold 66,637,092 shares of the Class A common stock, par value $0.0001 per share, of the Company.

 

63


Table of Contents

The Business Combination was approved by the Company’s stockholders at the special meeting in lieu of the 2021 annual meeting thereof (the “Meeting”).

Prior to the Meeting, the holders of 15,321,467 shares of Crescent’s common stock sold in its initial public offering exercised their right to redeem those shares for cash at a price of $10.14 per share, for an aggregate of approximately $155.4 million, which redemption occurred concurrent with the consummation of the Business Combination (the “Redemptions”). The Merger Agreement provided that the obligation of each of Crescent and LiveVox to consummate the Business Combination was conditioned on, among other things, a requirement that the total cash proceeds available in the transaction equal or exceed $250,000,000 (the “Minimum Cash Condition”). As a result of the Redemptions, each of Crescent and LiveVox agreed to waive the Minimum Cash Condition.

 

64


Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2021

(in thousands)

 

    Historical                 As of March 31,
2021
 
    Crescent
Acquisition
Corp.
    LiveVox
Holdings, Inc.
    Transaction
Accounting
Adjustments
          Pro Forma
Combined
 

ASSETS

         

Current Assets:

         

Cash

  $ 166     $ 14,171     $ 253,470       (a   $  131,191  
        25,000       (b  
        75,000       (c  
        (35,918     (d  
        (792     (e  
        (2,000     (f  
        (4,700     (g  
        (31,067     (h  
        (5,965     (i  
        (802     (j  
        (155,372     (m  

Restricted cash, current

    —         —         —           —    

Accounts receivable

    —         14,610       —           14,610  

Deferred sales commissions, current

    —         1,554       —           1,554  

Prepaid expenses and other current assets

    177       3,414       —           3,591  
 

 

 

   

 

 

   

 

 

     

 

 

 

Total Current Assets

    343       33,749       116,854         150,946  

Property and equipment, net

    —         3,280       —           3,280  

Goodwill

    —         47,481       —           47,481  

Intangible assets, net

    —         23,539       —           23,539  

Operating lease right-of-use assets

    —         6,119       —           6,119  

Deposits and other

    —         4,173       (3,641     (i     532  

Deferred sales commissions, net of current

    —         3,422       —           3,422  

Cash and investments held in Trust Account

    253,470       —         (253,470     (a     —    

Deferred tax asset

    —         —         —           —    

Restricted cash, net of current portion

    —         100       —           100  
 

 

 

   

 

 

   

 

 

     

 

 

 

Total Assets

  $ 253,813     $ 121,863     $ (140,257     $ 235,419  
 

 

 

   

 

 

   

 

 

     

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

         

Current Liabilities:

         

Accounts payable

  $ 752     $ 7,139     $ (2,541     (i   $ 4,598  
        (752     (j  
        —        

Accrued franchise and income taxes

    50       —         (50     (j     —    

Accrued expenses

    —         15,589       (800     (d     12,220  
        (28     (g  
        (2,541     (i  

Deferred revenue, current

    —         975       —           975  

Advance from related party

    2,303       —         —           2,303  

Current portion of term loan

    —         1,800       —           1,800  

Current portion of operating lease liabilities

    —         1,669       —           1,669  

Current portion of capital lease obligations

    —         256       —           256  
 

 

 

   

 

 

   

 

 

     

 

 

 

Total Current Liabilities

    3,105       27,428       (6,712       23,821  

 

65


Table of Contents
    Historical                 As of March 31,
2021
 
    Crescent
Acquisition
Corp.
    LiveVox
Holdings, Inc.
    Transaction
Accounting
Adjustments
          Pro Forma
Combined
 

Long Term Liabilities:

         

Warrant liability

    29,315       —         1,808       (q     1,808  
        (29,315     (s  

Forward Purchase Agreement liability

    1,945       —         (1,945     (q)       —    

Line of Credit

    —         4,672       (4,672     (g     —    

Term loan, net of current portion

    —         53,920       —           53,920  

Capital lease obligations, net of current portion

    —         31       —           31  

Operating lease liabilities, net of current portion

    —       $ 4,985       —           4,985  

Deferred tax liability, net

    —         116       —           116  

Other long-term liabilities

    —         373       —           373  

Deferred underwriting fee payable

    8,750       —         (8,750     (h     —    

Deferred revenue, net of current

    —         194       —           194  
 

 

 

   

 

 

   

 

 

     

 

 

 

Total Liabilities

    43,115       91,719       (49,586       85,248  

Redeemable Class A common stock

    205,698       —         (205,698     (k     —    

Stockholders’ Equity:

         

Preferred stock

    —         —         —           —    

Class A common stock

    —         —         —         (b     9  
        1       (c  
        —         (d  
        2       (k  
        6       (l  
        (1     (m  
        1       (n  

Class F common stock

    1       —         (1     (n     —    

Additional paid-in capital

    12,264       59,314       25,000       (b     251,254  
        74,999       (c  
        35,918       (d  
        (2,000     (f  
        (4,339     (i  
        205,696       (k  
        (6     (l  
        (155,371     (m  
        —         (n  
        22,139       (o  
        (51,721     (p  
        46       (r  
        29,315       (s  

Accumulated other comprehensive income (loss)

    —         (167     —           (167

Retained earnings (accumulated deficit)

    (7,265     (29,003     (71,035     (d     (100,925
        (792     (e  
        (186     (i  
        (22,317     (h  
        (22,139     (o  
        51,721       (p  
        137       (q  
        (46     (r  
 

 

 

   

 

 

   

 

 

     

 

 

 

Total Stockholders’ Equity

    5,000       30,144       115,027         150,171  
 

 

 

   

 

 

   

 

 

     

 

 

 

Total Liabilities & Stockholders’ Equity

  $ 253,813     $ 121,863     $ (140,257     $ 235,419  
 

 

 

   

 

 

   

 

 

     

 

 

 

 

66


Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(in thousands, except share and per share data)

 

     Historical                 Three Months
Ended March 31,
2021
 
     Crescent
Acquisition
Corp.
    LiveVox
Holdings, Inc.
    Transaction
Accounting
Adjustments
          Pro Forma
Combined
 

Revenue

   $ —       $ 27,945     $ —         $ 27,945  

Cost of revenue

     —         11,180       —           11,180  
  

 

 

   

 

 

   

 

 

     

 

 

 

Gross Profit

     —         16,765       —           16,765  

Operating Expenses:

          

Sales and marketing expense

     —         8,908       —           8,908  

General and administrative expense

     547       4,880       (24     (t     5,303  
         (100     (u  

Research and development expense

     —         6,180       —           6,180  
  

 

 

   

 

 

   

 

 

     

 

 

 

Total Operating Expense

     547       19,968       (124       20,391  
  

 

 

   

 

 

   

 

 

     

 

 

 

Income (Loss) from Operations

     (547     (3,203     124         (3,626

Change in fair value of the Warrant liability

     (3,700     —         125       (y     125  
         3,700       (z  

Change in the fair value of the Forward Purchase Agreement

     (3,240     —         3,240       (y     —    

Interest income from Trust Account

     (6     —         6       (bb     —    

Interest expense (income), net

     —         944       (79     (cc     865  

Other expense (income), net

     —         (7     —           (7
  

 

 

   

 

 

   

 

 

     

 

 

 

(Loss) income before income taxes

     6,399       (4,140     (6,868       (4,609

Provision for income taxes

     1       35       (1,824     (dd     (1,788
  

 

 

   

 

 

   

 

 

     

 

 

 

Net (loss) income

   $ 6,398     $ (4,175   $ (5,044     $ (2,821)  
  

 

 

   

 

 

   

 

 

     

 

 

 

Pro forma weighted average common shares outstanding — basic and diluted

             90,676,281  (ee) 

Pro forma net income (loss) per share — basic and diluted

           $ (0.03 ) (ee) 

 

67


Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2020

(in thousands, except share and per share data)

 

     Historical                 Year Ended
December 31,
2020
 
     Crescent
Acquisition
Corp.
(restated)
    LiveVox
Holdings, Inc.
    Transaction
Accounting
Adjustments
          Pro Forma
Combined
 

Revenue

   $ —       $  102,545     $ —         $  102,545  

Cost of revenue

     —         39,476       —           39,476  
  

 

 

   

 

 

   

 

 

     

 

 

 

Gross Profit

     —         63,069       —           63,069  

Operating Expenses:

          

Sales and marketing expense

     —         29,023       —           29,023  

General and administrative expense

     3,265       14,291       (120     (t     88,938  
         (511     (u  
         792       (v  
         186       (w  
         71,035       (x  

Research and development expense

     —         20,160       —           20,160  
  

 

 

   

 

 

   

 

 

     

 

 

 

Total Operating Expense

     3,265       63,474       71,382         138,121  
  

 

 

   

 

 

   

 

 

     

 

 

 

Income (Loss) from Operations

     (3,265     (405     (71,382       (75,052

Change in fair value of the Warrant liability

     13,005       —         492       (y     492  
         (13,005     (z  

Change in the fair value of the Forward Purchase Agreement

     1,789       —         (1,789     (y     —    

Offering cost associated with Warrants recorded as liabilities

     —         —         46       (aa     46  

Interest income from Trust Account

     (910     —         910       (bb     —    

Interest expense (income), net

     —         3,890       (237     (cc     3,653  

Other expense (income), net

     —         154       —           154  
  

 

 

   

 

 

   

 

 

     

 

 

 

(Loss) income before income taxes

     (17,149     (4,449     (57,799       (79,397

Provision for income taxes

     137       196       (15,350     (dd     (15,017
  

 

 

   

 

 

   

 

 

     

 

 

 

Net (loss) income

   $ (17,286   $ (4,645   $ (42,449     $ (64,380
  

 

 

   

 

 

   

 

 

     

 

 

 

Pro forma weighted average common shares outstanding — basic and diluted

             90,676,281  (ee) 

Pro forma net income (loss) per share — basic and diluted

           $ (0.71)  (ee) 

 

68


Table of Contents

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

NOTE 1 — DESCRIPTION OF BUSINESS COMBINATION

Pursuant to the Merger Agreement, the aggregate merger consideration paid to LiveVox Stockholders consisted of shares of newly-issued Class A Stock, equal to the Closing Number of Securities (as defined in the Merger Agreement) based on a price of $10.00 per share. The merger consideration paid to the stockholders of LiveVox was subject to adjustment based on LiveVox’s cash and indebtedness as of the closing date, among other adjustments contemplated by the Merger Agreement. Additionally, to further enhance liquidity by increasing cash available to the combined company following the closing of the Business Combination, each of Crescent and LiveVox agreed that approximately $32 million of consideration that would have otherwise been payable as cash to funds affiliated with Golden Gate Capital pursuant to the definitive agreement relating to the Business Combination was paid in the form of common stock of the combined company valued at $10.00 per share, and the cash remained on the combined company’s balance sheet at the closing of the Business Combination.

In addition to the consideration paid at the closing of the Business Combination, LiveVox Stockholders are entitled to receive additional Earn Out Shares from Crescent up to an aggregate of 5,000,000 shares of Class A Stock if the price of Class A Stock trading on the Nasdaq Capital Market exceeds certain thresholds during the seven-year period following the closing of the Business Combination. As an incentive for LiveVox to enter into the Merger Agreement, Sponsor and certain of Crescent’s independent directors have placed 2,543,750 shares of the Class A Stock they held immediately following the closing of the Business Combination (following the automatic conversion of such shares upon the closing of the Business Combination from shares of Class F Stock into shares of Class A Stock) in escrow to be released only if the price of Class A Stock trading on the Nasdaq Capital Market exceeds the same thresholds during the seven-year period following the closing of the Business Combination and will be forfeited if such thresholds are not achieved.

Crescent and Crescent Capital Group Holdings LP, an affiliate of the Sponsor, entered into, and simultaneously with entry into the Merger Agreement delivered to LiveVox, a Forward Purchase Agreement, whereby, among other things, Crescent acquired 2,500,000 shares of Class A Stock and 833,333 redeemable warrants of Crescent to purchase one share of Class A Stock for an aggregate purchase price of $25.0 million, in a private placement that closed immediately prior to the closing of the Business Combination. The securities issued pursuant to the Forward Purchase Agreement are subject to a lock-up period during which the transfer of such securities will be restricted.

Crescent also obtained PIPE Investment commitments from certain investors for a private placement of 7,500,000 shares of Class A Stock pursuant to the terms of the Subscription Agreements for an aggregate purchase price equal to $75.0 million.

As an incentive for LiveVox to enter into the Merger Agreement, the Sponsor also agreed to the cancelation of (i) 7,000,000 Warrants acquired by the Sponsor pursuant to a private placement in connection with the initial public offering of the Company at a purchase price of $1.00 per warrant and (ii) 2,725,000 shares of Class F Stock held by the Sponsor, in each case, for no consideration and concurrent with and contingent upon the consummation of the Business Combination.

NOTE 2 — BASIS OF PRESENTATION

The unaudited pro forma condensed combined balance sheet as of March 31, 2021 assumes that the Business Combination was completed on March 31, 2021. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 and the three months ended March 31, 2021 give pro forma effect to the Business Combination as if it had occurred on January 1, 2020, the beginning of the earliest period presented.

 

69


Table of Contents

The pro forma adjustments are based on the information currently available. The assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. The unaudited pro forma condensed combined financial information has been presented for informational purposes only. The unaudited pro forma condensed combined financial information does not purport to represent the actual results of operations that the Company would have achieved had the Companies been combined during the periods presented in the unaudited pro forma condensed combined financial statements and is not intended to project the future results of operations that the Company may achieve after the Business Combination. The unaudited pro forma condensed combined financial information does not reflect any cost savings that may be realized as a result of the Business Combination and also does not reflect any restructuring or integration-related costs to achieve those potential cost savings.

Notwithstanding the legal form of the Business Combination pursuant to the Merger Agreement, the Business Combination was accounted for as a reverse recapitalization under the scope of the Financial Accounting Standards Board’s Accounting Standards Codification 805, Business Combinations, or “ASC 805”, in accordance with U.S. GAAP. Under this method of accounting, Crescent is treated as the “acquired” company for financial reporting purposes and LiveVox is treated as the accounting acquirer. The Business Combination has been treated as the equivalent of LiveVox issuing stock for the net assets of Crescent, accompanied by a recapitalization. The net assets of Crescent are stated at historical cost, with no goodwill or intangible assets recorded. Operations prior to the Business Combination are those of LiveVox. LiveVox has been determined to be the accounting acquirer based on the evaluation of the following facts and circumstances:

 

   

LiveVox Stockholders have retained 75.7% of the Company’s voting rights;

 

   

The LiveVox management team comprises all key management positions of the Company; and

 

   

LiveVox Stockholders represent a majority of the Company’s Board of Directors.

Upon consummation of the Business Combination, the Company adopted LiveVox’s accounting policies. We have not identified any significant differences that have impacted the financial statements of the post-Business Combination Company.

There were no intercompany balances or transactions between the Companies as of the dates and for the periods of this unaudited pro forma condensed combined financial information. Accordingly, no pro forma adjustments were required to eliminate the activities between the Companies.

The pro forma condensed combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the Companies filed consolidated income tax returns during the periods presented.

In addition to the consideration transferred as discussed above, Crescent assumed LiveVox’s existing debt as of the Business Combination date, except for the amounts drawn on LiveVox’s line of credit (the “Line of Credit”) under its Credit Facility (as defined below), which was repaid concurrently with the consummation of the Business Combination.

NOTE 3 — ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION [NOTES SUBJECT TO CHANGE]

Transaction Accounting Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet

The Transaction Accounting Adjustments included in the unaudited pro forma condensed combined balance sheet as of March 31, 2021 are as follows:

 

(a)

Represents the reclassification of $253.5 million in cash and investments held in Crescent’s Trust Account to cash and cash equivalents to effectuate the Business Combination.

 

70


Table of Contents
(b)

Represents $25.0 million in cash received by Crescent from the purchase of 2,500,000 shares of Class A Stock and 833,333 warrants by Crescent pursuant to the Forward Purchase Agreement.

 

(c)

Reflects the proceeds of $75.0 million from the issuance and sale of 7,500,000 shares of Class A Stock at $10.00 per share to PIPE Investors.

 

(d)

Reflects the $35.9 million of cash paid and 3,591,644 shares of Class A Stock issued under the LiveVox Bonus Plans as part of the Business Combination, which includes the settlement of $0.8 million recognized as accrued expense on the balance sheet as of March 31, 2021.

 

(e)

Represents $0.8 million of cash bonus paid to LiveVox executive as part of the Business Combination

 

(f)

Represents the $2.0 million cash consideration paid into escrow under the terms of the Merger Agreement.

 

(g)

Represents $4.7 million used to repay amounts borrowed by LiveVox under its Line of Credit under the terms of the Merger Agreement, including settlement of accrued interest.

 

(h)

Represents the payment of Crescent’s acquisition-related transaction costs of approximately $31.1 million incurred as part of the Business Combination. Crescent’s transaction costs include the payment of $8.8 million of underwriting costs incurred as part of Crescent’s IPO that were deferred and committed to be paid upon the consummation of a business combination.

 

(i)

Represents the payment of LiveVox’s acquisition-related transaction costs of approximately $6.0 million, $4.3 million of which is capitalized as part of the Business Combination. As of March 31, 2021, $3.6 million was capitalized as deferred offering costs and $5.1 million was accrued for as accounts payable and accrued expenses. The remaining transaction expenses of approximately $0.2 million are reflected as if incurred on January 1, 2020, the date the Business Combination occurred for the purposes of the unaudited pro forma condensed combined statements of operations.

 

(j)

Represents the payment of $0.1 million of the Company’s accrued franchise and income taxes and $0.7 million of the Company’s accrued professional services fees at the closing of the Business Combination.

 

(k)

Reflects the reclassification of $205.7 million of Class A common stock subject to possible redemption to permanent equity.

 

(l)

Represents the recapitalization of 1,000 shares of LiveVox common stock into 66,637,092 shares of Class A Stock. This excludes the 3,591,644 Class A Stock issued under the LiveVox Bonus Plans as described in Note (d).

 

(m)

Reflects the redemption of 15,321,467 shares for aggregate redemption payments of $155.4 million allocated to Class A Stock and additional paid-in capital at par value of $0.0001 per share and at a redemption price of $10.14 per share based on the fair value of the cash and investments held in the Trust Account as of March 31, 2021 of $253.5 million.

 

(n)

Reflects the cancellation of 2,725,000 shares of Class F Stock and the conversion of the remaining 3,525,000 million shares of Class F Stock into 3,325,000 shares of Class A Stock, 2,543,750 of which are placed into an escrow account pursuant to the terms of the Merger Agreement. The parties to the Share Escrow Agreement, agreed and the shareholders approved in a special meeting held on June 16, 2021 to reduce by 200,000 the number of shares of Class A Stock (as such stock will exist following its conversion from Class F Stock at the time of the Business Combination) that the Sponsor would otherwise place into escrow at the time of the Business Combination.

 

(o)

Reflects $22.1 million of compensation cost related to the Finders Agreement.

 

(p)

Represents the elimination of Crescent’s historical retained earnings balance, after recording Crescent’s acquisition-related transaction costs and compensation costs as noted in Note (h) and Note (o), respectively.

 

(q)

Reflects the elimination of the historical Forward Purchase Agreement liability offset by the fair value of the 833,333 Forward Purchase Warrants issued under the Forward Purchase Agreement dated January 13, 2021.

 

71


Table of Contents
  As the Forward Purchase Warrants have the same terms as the Private Placement Warrants so long as they are held by a Crescent Fund, they are reflected on the unaudited pro forma condensed combined balance sheet as derivative liabilities.

 

(r)

Represents the portion of LiveVox’s $4.3 million of capitalized offering costs related to the Forward Purchase Warrants which have been expensed in the unaudited pro forma condensed combined statement of operations.

 

(s)

Reflects the change in accounting treatment of the Public Warrants, representing the derecognition of the Crescent Public Warrant liabilities and the recognition of LiveVox Public Warrants in permanent equity, as well as cancelation of the Crescent Private Placement Warrants, after consummation of the Business Combination.

Adjustments to the Unaudited Pro Forma Condensed Combined Statements of Operations

The Transaction Accounting Adjustments included in the unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2021 and for the year ended December 31, 2020 are as follows:

 

(t)

Represents the elimination of Crescent’s historical general and administrative expenses paid to an affiliate under the Administrative Support Agreement that terminated upon the Business Combination.

 

(u)

Represents the elimination of management fees and expense reimbursements to GGC Administration, L.P. under an advisory agreement between LiveVox and GGC Administration, L.P., which terminated upon the Business Combination.

 

(v)

Represents $0.8 million of cash bonus paid to LiveVox executive as part of the Business Combination as described in Note (e). The cash bonus is reflected as if incurred on January 1, 2020, the date the Business Combination occurred for the purposes of the unaudited pro forma condensed combined statements of operations. This is a non-recurring item.

 

(w)

Reflects the total transaction costs to be expensed for LiveVox in the statement of operations for the year ended December 31, 2020 as described in Note (i) above. Transaction costs are reflected as if incurred on January 1, 2020, the date the Business Combination occurred for the purposes of the unaudited pro forma condensed combined statements of operations. This is a non-recurring item.

 

(x)

Represents the one-time expense of $35.1 million related to the cash paid under the LiveVox Bonus Plans and an additional $35.9 million related to equity issued under the LiveVox Bonus Plans as part of the Business Combination as described in Note (d). The remaining expense of $0.8 million was recognized in the historical income statement of LiveVox.

 

(y)

Reflects the (1) elimination of the historical change in the fair value of Forward Purchase Agreement liability and (2) includes the change in fair value of the 833,333 Forward Purchase Warrants issued under the Forward Purchase Agreement dated January 13, 2021 as described in Note (q) above.

 

(z)

Reflects the derecognition of the changes in fair value of the Crescent Public and Private Placement Warrant liabilities as described in Note (s).

 

(aa)

Reflects expense in the statement of operations related to the reclassification of issuance costs as described in Note (r) above. Transaction costs are reflected as if incurred on January 1, 2020, the date the Business Combination occurred for the purposes of the unaudited pro forma condensed combined statements of operations. This is a non-recurring item.

 

(bb)

Represents the elimination of historical interest income recognized on the cash and investments held within Crescent’s Trust Account.

 

(cc)

Represents the elimination of historical interest expense recognized by LiveVox on amounts drawn under the Line of Credit, net of unused fees, that was repaid as described in Note (g).

 

72


Table of Contents
(dd)

Represents the impact of the Business Combination on the provision for income taxes, which was estimated using Crescent’s federal and state blended statutory tax rate of 26.6% for the three months ended March 31, 2021 and for the year ended December 31, 2020.

 

(ee)

Represents the net loss per share calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2020, the beginning of the earliest period presented. As the Business Combination is being reflected as if it had occurred at the beginning of the periods presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Business Combination have been outstanding for the entire periods presented. The unaudited pro forma condensed combined financial information has been prepared for the three months ended March 31, 2021 and year ended December 31, 2020:

 

     31-Mar-21      31-Dec-20  

Pro forma net income (loss)

   $ (2,821    $ (64,380

Weighted average number of shares of Class A Stock — basic and diluted

     90,676,281        90,676,281  

Net income (loss) per share of Class A Stock — basic and diluted (1)

   $ (0.03    $ (0.71

Weighted average number of shares of Class A Stock — basic and diluted

     

the Company’s public stockholders

     9,666,295        9,666,295  

Holders of the Company’s founder shares (2)

     781,250        781,250  

Forward Purchase

     2,500,000        2,500,000  

PIPE Investors

     7,500,000        7,500,000  

LiveVox Holdings, Inc. (3)

     70,228,736        70,228,736  
  

 

 

    

 

 

 
     90,676,281        90,676,281  

 

(1)

For the purpose of calculating diluted loss per share, it was assumed that all outstanding warrants of the Company sold in the IPO and the Forward Purchase Warrants are exchanged for Class A Stock. However, since this results in anti-dilution, the effect of such exchange was not included in the calculation of diluted loss per share.

(2)

The pro forma basic and diluted shares of the holders of the Company’s founder shares exclude 2,543,750 Lock-Up Shares that were placed into escrow at the closing of the Business Combination. The Company has deemed that these Lock-Up Shares are not participating securities, as the holder does not have the nonforfeitable right to participate in the distribution of earnings with the common shareholders if the earnout share price thresholds are not achieved.

(3)

The pro forma basic and diluted shares of LiveVox Holdings, Inc. include 3,591,644 shares to be issued under the LiveVox Bonus Plans and exclude 5,000,000 Earn-Out Shares that will be placed into escrow at the closing of the Business Combination. The Company has deemed that these Earn-Out Shares are not participating securities, as the holder does not have the nonforfeitable right to participate in the distribution of earnings with the common shareholders if the earnout considerations are not satisfied.

 

73


Table of Contents

BUSINESS COMBINATION

This subsection describes the material provisions of the certain agreements entered into in connection with the Business Combination, but does not purport to describe all of the terms of such agreements. The following summary is qualified in its entirety by reference to the complete text of such agreements, copies of which are included as exhibits to the registration statement of which this prospectus is a part.

Summary of the Business Combination

On June 18, 2021, the Company consummated the Business Combination pursuant to the Merger Agreement, by and among the Company, Function Acquisition I Corp, Function Acquisition II LLC, LiveVox Holdings, Inc. and GGC Services Holdco, Inc. As contemplated by the Merger Agreement, the Company changed its name to “LiveVox Holdings, Inc.”

The Merger Agreement provided that the obligation of each of Crescent Acquisition Corp and LiveVox to consummate the Business Combination was conditioned on, among other things, a requirement that the total cash proceeds available in the transaction equal or exceed $250,000,000 (the “Minimum Cash Condition”). As a result of the redemptions, each of Crescent Acquisition Corp and LiveVox agreed to waive the Minimum Cash Condition.

Additionally, to further enhance liquidity by increasing cash available to the combined company following the closing of the Business Combination, each of Crescent Acquisition Corp and LiveVox agreed that approximately $32 million of consideration that would have otherwise been payable as cash to funds affiliated with Golden Gate Capital was instead paid in the form of common stock of the Company valued at $10.00 per share, and the cash remained on the Company’s balance sheet at the closing of the Business Combination.

The parties to the Merger Agreement also agreed that any merger consideration that would otherwise be payable in cash pursuant to the terms of the Merger Agreement would instead be payable in stock. As a result, the consideration paid to the LiveVox Stockholder consisted of 66,637,092 newly issued shares of Class A Stock. The foregoing consideration paid to the LiveVox Stockholder may be further increased by the Earn-Out Shares placed in an escrow account to be released only if the price of Class A Stock trading on Nasdaq exceeds certain thresholds during the seven-year period following the closing of the Business Combination pursuant to the terms of the Merger Agreement.

The aggregate cash available to the Company from the Business Combination after the Closing was approximately $118 million, consisting of the Company’s net cash and cash equivalents as of the Closing, including proceeds of $75 million from the Company’s private placement of an aggregate of 7,500,000 shares of Class A Stock with a limited number of accredited investors (as defined by Rule 501 of Regulation D) without any form of general solicitation or general advertising pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, proceeds of $25 million pursuant to the private placement of an aggregate of 2,500,000 shares of Class A Stock and 833,333 Warrants (the “FPA Investment”) with a limited number of accredited investors (as defined by Rule 501 of Regulation D) without any form of general solicitation or general advertising pursuant to Section 4(a)(2) of the Securities Act and approximately $98 million of cash available to the Company from the trust account in which the proceeds from its initial public offering were placed after giving effect to the redemptions, minus approximately $5 million used to repay a portion of LiveVox’s outstanding indebtedness at the Closing, minus approximately $73 million of transaction expenses of LiveVox and the Company, minus $2,000,000 for the Adjustment Escrow Amount and minus $100,000 for the Stockholder Representative Expense Holdback Amount (as defined in the Merger Agreement).

On the Closing Date, in connection with the Business Combination, we entered into certain related agreements which are described below.

 

74


Table of Contents

Related Agreements

Registration Rights Agreement

At the closing of the Business Combination, the Company entered into the Amended and Restated Registration Rights Agreement, with the SPAC Sponsor and certain other stockholders of the Company, including the LiveVox Stockholder. Pursuant to the terms of the Amended and Restated Registration Rights Agreement, (a) any outstanding share of Common Stock or any other equity security of the Company held by a signatory thereto (besides the Company) as of the date of the Amended and Restated Registration Rights Agreement or thereafter acquired by a such holder and (b) any other equity security of the Company issued or issuable with respect to any such share of Common Stock held by such holder by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, will be entitled to registration rights.

The Amended and Restated Registration Rights Agreement provides that the Company will, as soon as practicable, but in any event within 30 days after the consummation of the Business Combination, file with the SEC a shelf registration statement. Such shelf registration statement shall register the resale of all securities registrable pursuant to the Amended and Restated Registration Rights Agreement held by the signatories thereto (besides the Company) from time to time, and the Company will use commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof, but in no event later than 60 days following the initial filing deadline. A majority of the signatories to the Amended and Restated Registration Rights Agreement associated with the SPAC Sponsor, as a group and the LiveVox Stockholder are each entitled to demand that the Company register shares of Common Stock held by such parties. The signatories affiliated with the SPAC Sponsor are entitled to make up to three such demands and the LiveVox Stockholder is entitled to make unlimited demands. In addition, the Amended and Restated Registration Rights Agreement provides certain “piggy-back” registration rights. The Company will bear the expenses incurred in connection with the filing of any registration statements pursuant to the terms of the Amended and Restated Registration Rights Agreement. The Company and the other signatories to the Amended and Restated Registration Rights Agreement will provide customary indemnification in connection with offerings of Common Stock effected pursuant to the terms of the Amended and Restated Registration Rights Agreement.

In the Amended and Restated Registration Rights Agreement, the LiveVox Stockholder also agreed to be bound by certain restrictions on the transfer of their Common Stock acquired pursuant to the Merger Agreement. Such Common Stock cannot be transferred, assigned or sold until the earlier to occur of: (A) 180 days after the completion of the Business Combination or (B) subsequent to the Business Combination, the date on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property.

The foregoing description of the Amended and Restated Registration Rights Agreement is not complete and is qualified in its entirety by reference to the complete text of the Amended and Restated Registration Rights Agreement, a copy of which is filed as Exhibit 10.2 hereto.

Escrow Agreement

On the Closing Date, the Company, the Stockholder Representative and Citibank, N.A., as escrow agent (the “Escrow Agent”), entered into an Escrow Agreement (“Escrow Agreement”) pursuant to which, on the Closing Date, the Company deposited $2,000,000 into an escrow account (the “Adjustment Escrow Amount”), to be drawn upon by the Company in case of any downward purchase price adjustment and otherwise released to the LiveVox Stockholder as merger consideration pursuant to the terms of the Merger Agreement. The Escrow Agent will hold such amount until the final merger consideration is determined in accordance with the Merger Agreement, at which point the Escrow Agent will release the funds in accordance with the joint written instructions duly executed and delivered by the Company and the Stockholder Representative to the Escrow Agent.

 

75


Table of Contents

The foregoing description of the Escrow Agreement is not complete and is qualified in its entirety by reference to the complete text of the Escrow Agreement, a copy of which is filed as Exhibit 10.4 hereto.

Finders Agreement

On January 13, 2021, Company and Neuberger entered into the Finders Agreement. Pursuant to the Finders Agreement, in exchange for Neuberger introducing the Crescent Acquisition Corp to LiveVox, Company agreed, following the closing of the Business Combination, to provide Neuberger compensation and registration rights. The Finders Agreement initially provided that Neuberger was initially eligible to receive 781,250 shares of Class A Stock upon the earlier of (i) one year following the date of the consummation of the Business Combination and (ii) following the closing of the Business Combination (x) at such time when the last sale price of the Class A Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period commencing at least 150 days after the closing of the Business Combination or (y) subject to certain conditions, upon the completion of a liquidation, merger stock exchange or other similar transaction. Additionally, pursuant to the Finders Agreement, Neuberger was eligible to receive up to an additional 1,943,750 shares of Class A Stock if the price of Class A Stock trading on Nasdaq exceeds the following thresholds during the seven-year period following the closing of the Business Combination: 781,250 of such shares will be issued to Neuberger if the Volume Weighted Average Share Price equals or exceeds $12.50 per share for 20 of any 30 consecutive trading days; another 781,250 of such shares will be issued to Neuberger if the Volume Weighted Average Share Price equals or exceeds $15.00 per share for 20 of any 30 consecutive trading days; and another 381,250 of such shares will be issued to Neuberger if the Volume Weighted Average Share Price equals or exceeds $17.50 per share for 20 of any 30 consecutive trading days.

The parties to the Finders Agreement agreed to reduce by 300,000 the number of shares of Class A Stock that Company would otherwise issue to Neuberger if the volume weighted average share price of the Class A Stock equals or exceeds $17.50 per share on Nasdaq or any other national securities exchange for 20 of any 30 consecutive trading days during the seven years following the closing of the Business Combination.

The foregoing description of the Finders Agreement is not complete and is qualified in its entirety by reference to the complete text of the Finders Agreement, a copy of which is filed as Exhibit 10.9 hereto.

 

76


Table of Contents

BUSINESS

References in this section to “we,” “our,” “us,” the “Company,” or “LiveVox Holdings, Inc.” generally refer to LiveVox and its consolidated subsidiaries.

Overview

LiveVox’s mission is to enable next-generation cloud contact center experiences. LiveVox offers cloud- hosted Contact Center as a Service (or CCaaS) platform for business processing outsourcing (BPO) organizations, enterprises, and collections agencies. Its offerings include omnichannel and artificial intelligence (AI), customer relationship management (CRM) and workforce optimization (WFO). LiveVox’s platform provides customers with a scalable, cloud-based architecture and preintegrated AI capabilities to support enterprise-grade deployments. Additionally, LiveVox’s platform features a native CRM which unifies disparate, department-level systems of record to present contact center agents with a single view of its customers. LiveVox has built a differentiated approach to the contact center software market and is complemented by an attractive financial model. Key highlights of LiveVox’s business and market opportunity include:

 

   

Large and growing CCaaS market opportunity: The contact center market is in the early stages of a shift to cloud-based solutions and LiveVox estimates that the vast majority of call center agents are not using cloud-based solutions today. Various trends are driving this transition, including digital transformation, the automation of manual contact center labor, and the need for AI-enabled analytics to support omnichannel workflows and agents. LiveVox estimates this market to be approximately $27 billion for 2020, of which approximately $5 billion is comprised of cloud-based solutions. LiveVox and other industry sources estimate the total spend to reach approximately $83 billion by 2030. As enterprises continue to execute on their digital transformation strategies, LiveVox is well positioned to capture a meaningful amount of this growth as it increases its investment in sales and marketing to educate more potential customers on its platform.

 

   

Differentiated product: LiveVox offers a cloud-based, enterprise-focused contact center solution. The LiveVox platform consists of innovative cloud-based AI and omnichannel offerings, anchored by its native CRM solution. LiveVox’s products are designed to enable customers to remove legacy technology barriers and accelerate adoption of cloud-based solutions, regardless of digital transformation journey status. LiveVox’s platform is configured with features and functionalities as well as compliance standards and capabilities, and integrations with many existing third-party solutions, providing customers with a simple and scalable implementation process. LiveVox believes that its integrated offering accelerates the adoption of cloud-based contact center solutions, eliminates data silos, and allows its users to maximize engagement with their customers and create differentiated end user experiences. LiveVox believes that it is currently the only company to offer a product that integrates Omnichannel, Contact Center, CRM, WFO and AI capabilities in a single offering.

 

   

Integration: LiveVox’s products integrate AI and omnichannel capabilities under one platform, alongside CRM and WFO functionalities, providing customers with a single platform to support their contact center capabilities while providing consistent platform-wide analysis and reporting.

 

   

Approach to CRM and data: LiveVox’s products unify disparate, department-level systems of record to present a single view to contact center agents, eliminate data silos that exist between disparate and disconnected solutions, provide great customer experiences, and lower costs for its customers. Additionally, LiveVox’s approach enables simpler, more cost-efficient deployment and scaling when compared to competing solutions.

 

   

Enterprise-grade architecture: LiveVox offers enterprise-grade compliance, security, and governance capabilities that benefit its customers, many of whom are in highly regulated industries. While LiveVox’s platform is scalable for businesses of all sizes, it primarily serves enterprise companies with complex contact center needs. Approximately 90% of LiveVox’s revenue comes from customers deploying greater than 50 seats with LiveVox.

 

77


Table of Contents
   

Attractive financial profile, underpinned by several qualities:

 

   

Recurring revenue model: LiveVox’s revenue model consists of approximately 99% recurring revenue. For the years ended December 31, 2020, 2019, 2018 and 2017, LiveVox’s revenues were $102.5 million, $92.8 million, $77.2 million and $60.6 million, respectively, representing year- over-year growth of 10%, 20% and 27%, respectively. LiveVox’s Adjusted EBITDA for the years ended December 31, 2020, 2019, 2018 and 2017 was $8.5 million, $13.3 million, $11.0 million and $3.8 million respectively. For the three months ended March 31, 2021, LiveVox’s revenues and Adjusted EBITDA were $27.9 million and $(0.2) million, respectively.

 

   

Attractive unit economics: LiveVox benefits from strong sales efficiency, driven by the productivity of its salesforce and flexible commercial model. This model seeks to meet customers at any stage of their digital transformation by utilizing a “land and expand” strategy that allows LiveVox to provide a subset of its full contact center solution to meet the initial requirement, and then expand that relationship by providing more features and functionality that empowers the customer to continue on their journey to greater digital and AI adoption. For the years ended December 31, 2020, 2019, 2018 and 2017, LiveVox’s LTM Net Revenue Retention Rates were 106%, 118%, 120% and 115%, respectively. For the three months ended March 31, 2021, LiveVox’s LTM Net Revenue Retention Rate was 99 %. Notwithstanding for the impact of COVID-19 on fiscal 2020, LiveVox’s average net revenue retention rate was 115% over the period 2017 to 2020. These qualities contribute to attractive unit economics. LiveVox estimates that the average calculated lifetime value of LiveVox’s customers is approximately seven times the associated cost of acquiring them for the time period from 2017 to 2020.

 

   

Resilience: LiveVox has not experienced a sustained disruption in its overall business as a result of COVID-19. In the first half of 2020, LiveVox’s usage-based revenues were impacted due to lower volumes, although usage revenue returned to growth in the third quarter of fiscal 2020. LiveVox’s contracted revenues (comprising approximately two thirds of LiveVox’s overall revenue) has grown at least 18% in each quarter of 2020 compared to the respective quarters of 2019. In the second half of fiscal 2020, LiveVox’s business rebounded to normalized levels of growth, and its bookings outperformed its budgeted plan for 2020 (that was set in 2019 and not subsequently adjusted).

Since LiveVox’s acquisition by funds affiliated with Golden Gate Capital in 2014, it has invested in reaching product maturity and developing a differentiated value proposition for enterprise customers. Over this time period, LiveVox sustained its revenue growth and sustained attractive unit economics. LiveVox intends to build on this foundation and increase its sales and marketing investment to capture future opportunity, including by increasing the size and reach of its go-to-market organization, expanding its channel and geographic presence, and continuing to build on the efficiency and productivity of its salesforce.

Shift to Cloud-Based CCaaS Solutions

LiveVox believes that the vast majority of today’s businesses are still using on-premise solutions and the market for cloud-based contact center software is growing rapidly, driven by a number of factors LiveVox believes to be true, including the following:

 

   

Digital transformation: Many companies continue to modernize all aspects of their businesses, incorporating digital, mobile, and cloud technologies in all areas. This is especially true for contact centers, where cloud-based solutions increase agility, flexibility, and efficiency.

 

   

Automation of manual labor: Human labor has traditionally been a necessity and the largest area of spend for the contact center. However, modern AI and cloud technologies support offerings that streamline manual processes. As these solutions reach cost and performance parity with manual labor, LiveVox expects their penetration to further increase.

 

78


Table of Contents
   

Increased focus on customer experience: In the past, contact centers were viewed primarily as cost centers. Today, they are viewed as an important part of the customer experience, and, ultimately, the enterprise brand. As a result, the contact center is viewed as a key point of contact in facilitating a high-value customer experience. Contact centers are increasingly focused on user engagement, resulting in greater focus on AI-enabled analytics and CRM. Organizations are subsequently evaluating their technology strategies and the role of the contact center agent, and increasingly shifting to cloud- based solutions.

 

   

Increased demand for work-from-home flexibility: Historically, organizations viewed on-premise infrastructure as better suited for deployments with significant security, compliance, and governance requirements. Those beliefs have evolved more towards acceptance of cloud-based solutions in recent years and the COVID-19 pandemic has accelerated this evolution as it caused a rapid increase in remote work and distributed workforces, accelerating the shift to cloud-based solutions.

Limitations to Broader Adoption of CCaaS

LiveVox believes that despite the clear need for cloud-based contact center software, existing competitors’ cloud solutions lack key functions and qualities, limiting the rate of adoption. LiveVox believes key factors limiting the broader adoption of cloud-based contact center solutions include:

 

   

Data integration: Traditional contact center solutions offer bespoke, department-level integration with a customer’s existing systems of record, resulting in data generated outside the contact center being separately managed and not easily accessible to the agent, further creating poor end user experiences.

 

   

Complex and costly implementation: Traditional contact center software vendors offer costly and time-intensive implementation processes that often require bespoke integration with disparate systems of record at each deployment site. These often require high upfront and ongoing maintenance costs, and considerable time invested by IT teams. As IT budgets become increasingly constrained, companies need solutions that are simple and cost-efficient to deploy and scale.

 

   

Risk mitigation: Existing solutions lack the risk and compliance capabilities required of large, global businesses today. This creates a growing business risk for companies relying on their contact center for customer-facing deployments. Large enterprises require these advanced risk mitigation capabilities in particular, to adhere to their compliance standards.

 

   

Investment in legacy infrastructure: Based on internal and industry estimates, LiveVox believes approximately 15% of current spend on contact center software solutions is comprised of cloud offerings. Businesses that have invested large amounts of capital into existing infrastructure often have upgrade cycles of greater than five years, further limiting their ability to quickly shift to cloud-based solutions.

LiveVox’s Opportunity

LiveVox’s CCaaS market opportunity consists of the total spend on contact center software solutions. LiveVox estimates this market to be approximately $27 billion in 2020, of which approximately $5 billion is comprised of cloud-based solutions and LiveVox estimates total spend to reach approximately $83 billion by 2030. This growth is driven in part by the increasing automation of manual workflows using AI. LiveVox believes that as enterprises continue to execute on their digital transformation strategies, it is well positioned to capture a meaningful amount of this cloud transition growth as it increases its investment in sales and marketing to educate more potential customers on its platform.

LiveVox believes that the majority of its addressable market is unpenetrated today. Over time, LiveVox expects its total addressable market to grow considerably, due to a combination of cloud-based market tailwinds and LiveVox’s shift into new products to expand its addressable market. LiveVox continues to expand into other solutions, and benefit from market tailwinds in the cloud-based contact center software market as on-premise solutions shift to the cloud and contact center labor is automated.

 

79


Table of Contents

LiveVox’s Offerings

 

LOGO

LiveVox’s cloud-based contact center platform features a comprehensive, integrated suite of omnichannel, AI, CRM, and WFO capabilities. LiveVox’s products are differentiated by the following characteristics:

 

   

Comprehensive offering: LiveVox’s products provide voice, messaging, chat, AI, and WFO capabilities configured with LiveVox’s CRM. These products are provided in a single platform, with consistent user experiences across products and seamless integration with other systems of record.

 

   

Pre-integrated: LiveVox’s native CRM is integrated to work with existing vendor solutions. As a result, the implementation process is simple for IT teams to deploy and scale the LiveVox software. LiveVox’s solutions can be implemented in as quickly as three weeks. Additionally, LiveVox’s products unify disparate, department-level systems of record to present a single view to the agent, which eliminates data silos and provides great customer experiences.

 

80


Table of Contents
   

Cloud-native architecture: LiveVox uses a cloud-based, multi-tenant architecture model, with an approach designed from the ground up to operate securely while adhering to compliance and governance requirements. These features allow customers to easily scale their use of LiveVox’s products and spend with LiveVox, including adding new features and receiving software upgrades.

 

   

Enterprise-grade functionality: LiveVox’s products have strong enterprise grade compliance and security capabilities that help differentiate it from the competition. LiveVox offers advanced compliance capabilities that are demanded by its customers, many of whom are in highly regulated industries.

 

   

Flexible commercial model: LiveVox’s commercial model consists of an optimized combination of contracted billing and usage-based billing, with products delivered through bundles. These bundles enable LiveVox to bring in customers at multiple points in their digital transformation.

Benefits to LiveVox’s Customers

LiveVox’s platform uses AI capabilities to accelerate digital transformation for its customers. LiveVox believes that the following key attributes differentiate its platform, to both its customers and their end users:

 

   

Scalable, easy to use platform: LiveVox’s omnichannel/AI solution integrates with customers’ existing vendors, providing a flexible data platform that scales to reach customers as businesses grow. LiveVox allows businesses to rapidly adapt their strategies to meet the standards of changing technology and regulatory environments, in a simple product that is configured with value-added products built for mid-size and enterprise customers.

 

   

Accelerating digital transformation: LiveVox’s products enhance customers’ abilities to transform their businesses, increase agility, and create amazing customer experiences. LiveVox’s advanced omnichannel / AI capabilities and WFO tools provide insights on both its customers’ contact center operations, as well as on their customers. These insights facilitate strong customer and end user experiences, while improving agent productivity.

 

   

Cost-efficient: LiveVox’s commercial model typically requires lower implementation costs and resources when compared to other solutions, and following implementation, customers are able to scale their spend with their contact center needs. LiveVox’s AI-configured, native CRM facilitates faster deployments for its customers, enabling them to avoid long, costly integrations and the complexity that agents face when navigating multiple systems of record.

 

   

Consistent and continuous experience for end users: LiveVox’s integrated suite of products improves the end user experience by combining all of a user’s information, providing them with a consistent experience across SMS, voice, web, chat, and other channels, with all of their information stored in one central location. Today’s modern contact center needs to route the right communication to the right agents, providing agents access to a single view of pertinent customer information in real time to facilitate a seamless customer journey.

Growth Strategies

LiveVox is driving considerable growth in its business by executing across a number of dimensions including:

 

   

Acquire new customers: LiveVox is increasing its investment into sales and marketing to grow its customer base. LiveVox is growing its team of customer success managers and field-based reps, building its marketing capabilities to expand its reach, and investing in initiatives to improve salesforce productivity.

 

   

Increase revenue from existing customers: LiveVox benefits from a land and expand model in which its revenue from existing customers grows over time. This is driven by LiveVox’s focus on large

 

81


Table of Contents
 

enterprise customers, as well as its sales strategy in which LiveVox often “lands” in a single department or line of business, providing it a strong upsell potential over time to expand the amount of business it does with a customer. For the last four years ending December 31, 2020, LiveVox’s LTM Net Revenue Retention Rate was 115%, on average. LiveVox believes a considerable opportunity exists for additional revenue from its existing customers through the sale of additional seats and products. LiveVox has identified opportunities it believes will allow it to expand its revenue from existing customers based on seats that are not currently using LiveVox’s software. LiveVox will continue to invest resources into identifying and executing on opportunities for increased penetration with existing customers.

 

   

Accelerate product innovation: LiveVox believes its platform is ideally suited for expansion and has a demonstrated track record of expanding the functionality and use cases of its products. Since 2014, LiveVox has expanded the functionality of its platform from an outbound-focused collections provider to an integrated omnichannel/AI platform that addresses all aspects of the agent experience. LiveVox will continue to invest in new technologies and harness existing ones.

 

   

Grow the LiveVox platform offering through partnerships and opportunistic M&A: LiveVox plans to continue to solidify its position as an enterprise cloud-based contact center software company. In addition to ongoing organic investment and partnerships, LiveVox will continue to explore opportunistic M&A as a source of product expansion, geographic reach, and growth.

LiveVox’s Products

LiveVox’s cloud contact center software is provided to customers on a subscription basis and consists of three major families of products all fully integrated to deliver a comprehensive end-to-end solution for its customers: CRM, Omnichannel and AI, and WFO. LiveVox’s CRM platform, designed specifically for contact centers, acts as an orchestration layer, allowing customers to design customer journey, create smart campaigns and ensure each interaction is routed to the appropriate employee. The combination of a unified data layer joined with omnichannel, AI and WFO functionalities ensures that customers receive what LiveVox views as all of the key components necessary to operate a modern contact center. The platform is built upon a public cloud infrastructure with the utilization of a micro-service architecture and a robust set of APIs, allowing for robust integrations and a network of partners further enhancing the platform.

CRM

 

   

Contact Manager and Extract, Transform, and Load (“ETL”) Tools — At the core of the LiveVox platform is a database layer that functions as a repository and orchestration layer for customers and their customer records. These records function as an index allowing each communication to be appropriately correlated to each customer. This database fulfills the need for customer service, sales, business process outsourcing (“BPO”) and other customers to ensure no single interaction is orphaned. The combination of historical data, consumer attributes and consent are utilized by multiple applications listed below to enhance consumers’ experiences in any channel and ensure that agents are provided relevant information and analytical models are appropriately set-up with the right data. Moreover, the application provides a visual layer, designed to understand customer population, create “what if” scenarios and execute simple and complex segmentation strategies for personalized campaign launches in an Omnichannel environment. Additionally, LiveVox has invested in a robust set of ETL tools designed to integrate with modern CRM platforms, systems of records and legacy systems, ensuring consistent management of data and high reliability of future AI deployments.

 

   

U-CRMProvides a visual layer, surfacing relevant information to agents during every interaction. This offering provides relevant customer details, helping to expedite calls through a shorter authentication and verification process. Access to prior interactions across voice, email, SMS, chat and other channels helps agents understand use history and gives better context to the conversation. All communication channels are exposed to agents allowing them in real-time to send notifications via

 

82


Table of Contents
 

SMS or follow-up with an email if the conversation requires it. Moreover, supporting attachments, key notes and account details are available through a single interface. A universal inbox ensures all non-voice interactions are routed to agents to easily access and respond to customer inquiries.

 

   

U-TicketCreates support tickets and tracks all the relevant details to solve issues. This offering ensures that all communication including phone calls, emails, chat conversations and short message service (“SMS”) messages is tracked with all the details provided to customer teams, helping them solve problems quickly and empowering the team with visibility across the entire organization. It automates processes through simple configuration to route tickets to appropriate teams for quicker resolution, close out customer requests for increased satisfaction, and escalate urgent issues to appropriate teams and managers. It also provides access to channels, by offering digital forms that allow for simple ticket classification and identification by customers 24 hours a day, seven days a week.

 

   

U-ScriptA visual agent flow tool designed to provide guidance and visual navigation to agents. U-Script is commonly utilized to improve training for new employees. The tool can be configured and modified by administrators and provided to agents on demand. Compliance teams seek to ensure appropriate disclosures are presented during each and every conversation and any customer responses are captured and recorded in an indexed database.

 

   

Phone Dial Attempt Supervisor (“PDAS”) — Enables contact centers to set rules and restrictions relative to the number of voice calls attempted to any particular phone number and/or account. The application provides holistic capability to manage both campaign-based and manually initiated attempts across a number of granular settings from account type, telephone number types and consumer residing state. The application provides a visual administrative layer allowing compliance professionals to set rules and restrictions based on their enterprise communication standards. This application helps customers ensure consistency in communication and respects consumer privacy and legal standards between consumers and their brands.

Omnichannel and AI

 

   

Voice

 

   

Inbound — Provides customers with enterprise grade voice services and features. Utilizing LiveVox’s unified data model, callers are automatically identified through a combination of automatic number identification (“ANI”) match technology, third-party data lookups and/or customer self-authentication methods. Call history is dynamically retrieved, identifying prior agent conversations, agent ownership and/or unique customer attributes, helping to route calls via LiveVox’s automated call distributor (“ACD”). Callers are matched with agents based on a combination of availability, skills and proficiencies, ensuring the appropriate match of customer to agent. Administrators gain real-time visibility across their entire organization through a combination of dashboards, providing top-level metrics with drill-down capabilities and real-time coaching tools such as whisper, barge or take-over.

 

   

Outbound — Provides what LiveVox believes to be best-in-class outbound voice applications that combine the scalability of its platform with compliance standards required by companies in highly regulated industries. LiveVox’s outbound voice capabilities function independently as a stand- alone as well as blended into inbound voice operations, allowing customers to maximize agent efficiency and adhere to inbound and outbound voice service level agreements (“SLA”). LiveVox believes that its architecture ensures that each outbound dialing system contains software and hardware separation necessary to comply with the highest of regulatory standards. LiveVox’s outbound applications include the following functions:

 

   

Predictive dialing — a high-velocity dialing tool commonly utilized by sales organizations, enterprise customers as well as others obtaining strong forms of consent necessary to reach many customers in a short manner with live agents. The system utilizes predictive algorithms,

 

83


Table of Contents
 

which adjust in real-time to pair groups of agents with number of calls and consumer answer patterns.

 

   

Unattended dialing — a high-velocity voice messaging tool designed to deliver critical time- sensitive messages to consumers. Utilized particularly for the education, health care and financial services verticals to remind consumers of appointments and other vital business matters.

 

   

Outbound IVR (interactive voice response) — a messaging application allowing consumers to opt into conversations with agents based on confirmation of good/services or to serve as an immediate escalation point. Commonly utilized in the financial services and health-care verticals for reminders and ability to speak with a contact center individual.

 

   

Manual dialing — a strictly manual environment allowing agents to manually initiate a call to consumer via a single click on a phone number and/or a manual entry of phone numbers into the agent phone panel. The manual systems do not contain any capability or capacity to make any other forms of calls and is commonly utilized by an organization unsure of current consent and/or a potential revocation of consent by the consumer.

 

   

Human Call Initiator (HCI®) — a LiveVox-proprietary outbound dialing system that allows agents to launch calls manually via a single click (i.e., single click/single call). The user interface is optimized to deliver a single phone number to an agent to initiate a call while ensuring that no call is dialed automatically.

 

   

IVR and contact flow — LiveVox provides customers the tools to create cross-channel, self-service journeys that are custom fit for their customers. LiveVox offers a wide array of features allowing its customers to customize their IVR’s with their bespoke needs, including drag-and-drop features, 40+ pre-built modules, Text to Speech (TTS) capabilities, a library of professionally recorded voice prompts, and omnichannel capabilities. Additionally, LiveVox’s application programming interfaces (“API”) modules within Contact Flow Editor permit customers to use representational state transfer (“REST”) APIs to integrate with existing systems. LiveVox’s IVR supports a “bring-your-own bot environment” while also providing a number of connectors to leading bot and virtual agent providers.

 

   

Dashboard, Reporting, Wall-Boards — LiveVox provides a series of dashboard and reporting interfaces across the entire product suite, with the ability to drill-down to each individual interaction. A series of real-time dashboards provide valuable insights by displaying real-time contact center metrics across voice, email, SMS, and chat, including agent performance, tickets created or quality of interactions. The bi-directional nature of the dashboards provides true visibility into the contact center. Agent performance views provide the ability to understand agent status and monitor the exact conversation an agent is engaged in. The reporting suite offers a number of industry standards and best practice reports along with the capability to filter across multiple dimensions and combine interaction, agent and consumer data elements, providing true insight for enterprise organizations. Wall-boards are specifically designed for large scale display options within a contact center, providing contact center insight with a highly configurable interface with real-time alert capabilities.

 

   

SMS Messaging — LiveVox provides a comprehensive SMS suite for customers ensuring that multiple use cases across many verticals are met. These offerings ensure that messages are delivered at a high through-put across short-code, long-code, toll-free number and 10-digit long code (“10-DLC”) formats. The platform provides an attachment library and facilitates messages via rich communications systems (“RCS”) protocols. LiveVox’s aggregator-agnostic architecture supports the ability to independently route volume to observe high SLA standards for message delivery. Strategies and hold-out timeframes along with key word response management ensure customer service is always top of mind. The LiveVox platform provides customers the ability to consistently observe guidelines published by Cellular Telecommunications and Internet Association (“CTIA”) and offers customer tools for visibility of opt-in and opt-outs across the consumer base. A universal inbox is provided to ensure SMS responses are appropriately routed, distributed and managed by agents.

 

84


Table of Contents
   

Email — LiveVox email offerings provide campaign and email response capabilities, ensuring all email interactions are stored at the customer level. The campaign-based function provides an HTML build tool, helping customers easily configure templates, insert variables and ensure content meets brand standards. A universal inbox provides agents access to email responses, eliminating race conditions and ensuring every interaction is joined with a customer profile. LiveVox provides the ability to comply with the requirements of the Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003, and every obtainment or removal of consent can be managed within the platform.

 

   

WebChat — WebChat offers LiveVox customers the capability of providing service through a web-based or mobile channel, allowing customers to begin conversations instantly through any site. The WebChat product ensures text, images, documents and even screen-share can be easily shared between consumers and agent employees to deliver quick problem resolution.

 

   

Virtual Agents & Bots LiveVox provides an environment that offers customers the ability to automate and enhance conversations with consumers. The platform offers three variants of assisted conversations

 

   

Managed Virtual Agent — a custom-created virtual agent capability combining Natural Language Processing, Automated Speech (Text) Recognition, Learning Intents & Suggestions paired with human oversight. This offering provides customers a fully managed service of tuning and maintaining Virtual Agents & Bots.

 

   

Self-Service Virtual Agent — a self-directed model to create a virtual agent and/or Bot utilizing a visual layer to prescribe intents, analyze patterns and create new automated flows for the virtual agent and/or Bot. This is designed for simpler user cases, quicker deployments and smaller enterprise organizations needing to make small changes quickly.

 

   

Bring Your Own — provides the ability for our customers to integrate their own virtual agent provider into the LiveVox framework utilizing a low code environment provided through the LiveVox Platform.

All of the above paths for customers offer three advantages: expedited deployments, enhanced customer experience and ability to deploy against any communication channel. Expedited deployments allow customers in a low code setting to integrate or connect their virtual agent into the contact center setting and enrich each conversation through utilization of LiveVox CRM data directly within the virtual agent, which ensures the virtual agent has the proper context for many interactions. Enhanced customer experience is driven through virtual agent awareness of customers and their data through the LiveVox CRM. In addition, this CRM ensures seamless hand-offs between virtual agents and human agents within the contact center, should the need to escalate arise. Any of the virtual agent deployments maybe set against a single or multiple channels in which customers operate, decreasing the need to build separate logic for each channel at a time and ensuring consistency in virtual agent communication.

 

   

Campaign management — LiveVox offers a sophisticated tool for managing segmentation and creating campaigns for customers. The visual editor allows for creation of a variety of scenarios based on consumer attributes, prior interaction outcomes as well as compliance-based restrictions. Furthermore, strategies are utilized to optimize calling windows and message delivery based on optimized windows of time or compliance-based restrictions enacted by the customer.

WFO

 

   

Call and screen recording Provides administrators the capability to record voice conversations as well as record agent screens to help facilitate quality management activities, and to help with

 

85


Table of Contents
 

compliance and audits for customers in highly regulated verticals. A reporting graphical user interface (“GUI”) provides the ability to look-up conversations and filter for auditing purposes.

 

   

Business Intelligence — Provides administrators and operators business insight by combining CRM data with operational insight across channels through a combination of 150+ reports and dashboards. The LiveVox analyzer tool gives analysts insight to map new variables and create key metrics and dashboards to discover valuable insights. A number of machine learning models can also be applied to this tool to optimize enterprise performance.

 

   

Quality management — Provides feedback loops between contact center operators and agents by routing contact center interactions to quality management teams for evaluation and analysis. Quality teams can assign values and create scorecards to evaluate every interaction and provide instant agent feedback to ensure agent performance is optimized, documented, and ultimately improved on. An intuitive interface ensures a connection between quality teams and the agent desktop providing a single system to manage quality management. A learning library supports these efforts giving operators the ability to assign learning material to further enhance agent conversations.

 

   

Outside Collection Agency (OCA) analytics — Connects enterprise customers and the agencies that service them. This auditing tool provides enterprise customers the ability to track call volumes, agent performance, and call recordings to assess agency performance and compare against other outsourcers and create visibility through a normalized data set.

 

   

Speech and Text analytics (SpeechIQ®) — Allows organizations to accurately and objectively monitor, analyze, and score all agent interactions with one intuitive tool. It provides an understanding of call categorization and sentiment in detail. The tool can be used to help identify regulatory risk, poor performance, or customer dissatisfaction, among other factors.

 

   

Agent Scheduling — Provides an interface for administrators and agents to create, modify, bid, and forecast schedules. The tool provides the ability for customers to forecast needed volumes of agents based on inbound volume as well as set goals for service levels. The agent scheduling capability extends to agents with the ability to view, modify and/or trade shifts amongst other agents.

 

   

CSAT (Customer Satisfaction) — Gives customers the ability to understand consumer sentiment following an interaction, creating custom surveys delivered through the voice channel. A visual GUI provides the ability to analyze results for a deeper understanding at the interaction, agent, or contact center level.

 

   

Administration and APIs — LiveVox provides a robust set of APIs allowing customers to operate a number of customer or vertical solutions for consumer communications. The API set is highly scalable, allowing enterprise level customers to utilize it for various use cases including channel communication purposes, agent modification, and creation. A robust set of roles and permissions provide customers control of the LiveVox portal environment, which allows the customer to limit access points and ensure compliance and security standards are met for enterprise organizations.

Customers

LiveVox had approximately 324 customers as of March 31, 2021, including enterprises, Fortune 1,000 financial institutions, and BPO (business process outsourcing) firms. As of March 31, 2021, no single customer represented more than 10% of LiveVox’s revenues. LiveVox’s enterprise customers span a variety of industries, including financial services (including leading Banks and Fin-Techs), healthcare, consumer/retail, and telecommunications. In 2020, approximately 90% of LiveVox’s revenue came from customers deploying greater than 50 seats with LiveVox.

 

86


Table of Contents

Sales & Marketing

LiveVox’s go-to-market strategy is led by its direct sales force. This team is primarily focused on enterprise and mid-market organizations, which LiveVox defines as organizations with (i) greater than 50 seats and (ii) the estimated potential to spend at least $5,000 per month on LiveVox’s services. LiveVox has divided the sales team into three groups: (1) the national sales team comprised of (A) “Hunters” (who are responsible for new logo generation and who generally keep accounts with upsell potential for the first year following initial booking) and (B) “Farmers” (who are responsible for account upsell and retention following the transition from a Hunter) focused on accounts greater than or equal to 250 agents (which LiveVox considers large accounts), (2) the mid- market sales team comprised of Hunters and Farmers focused on accounts between 50 and 250 agents and accounts where we estimate we do not have potential to increase the amount of business we do with such customer, and (3) overlay teams focused on facilitating sale leads from LiveVox’s channel partners and on specific products on an as needed basis. The overlay teams are responsible for assisting the Hunters in meeting their sales objectives in their area of expertise. LiveVox has developed a targeted and disciplined, outcomes- based land and expand sales strategy designed to enable its sales force to efficiently generate and close net new logo opportunities within LiveVox’s ideal customer profile (ICP). Additionally, LiveVox has a strategic cadence around upsell and cross-sell opportunities that center on regularly scheduled customer business reviews. These business reviews lead to additional products being showcased/positioned into LiveVox’s existing customer base. In addition, LiveVox intends to continue investing in initiatives to grow its team of business consultants, technical account managers and customer success managers, build out its marketing capabilities, and continue to improve salesforce productivity.

Supporting both the National Account and Mid-Market Hunters is LiveVox’s outbound lead generation (OLG) team. This OLG team cultivates and nurtures over 100,000 subscriber companies and prospects in partnership with the sales team while also fielding inbound prospect traffic (web chat and inbound inquiries) in an effort to bring them into the sales funnel as highly qualified leads.

LiveVox’s marketing team uses a data-driven approach for lead generation and nurture activities. LiveVox offers product “bundles” that align with customer needs and take advantage of its differentiating attributes. Using intent analytics, LiveVox crafts streams of content and advertising specifically geared to each prospect and their product interests, in an effort to establish relevant awareness and interaction, and ultimately purchase consideration. To accomplish this, the team employs a number of tactics, including content curation, a full array of digital marketing, trade shows, webinars, industry analyst programs, public relations, and more. LiveVox’s lead generation team works to establish a rapport with each prospect, ultimately introducing them to a sales Account Executive to continue the relationship.

Research and Development

LiveVox’s research and development drives continuous innovation cycles for its contact center platform. LiveVox’s functional, industry, and technology experts collaborate with customers and partners to analyze data trends, apply industry best practices, and innovate on new products that result in new features and functions regularly being added to the platform – a process LiveVox refers to as Data Driven Innovation (DDI). With its breadth of deeply integrated contact center products and over 300 customers, LiveVox has a wealth of data to drive new features for agent experience and customer experience including data analytics, machine learning, and artificial intelligence. These features are bundled and released as new platform releases three times a year.

LiveVox’s core research and development operations are based in San Francisco, California; Medellin, Colombia; and Bangalore, India. This geographic footprint allows for recruitment from broad and diverse talent pools. As of the date of this filing LiveVox had over 135 full-time equivalent employees in LiveVox’s research and development group. LiveVox’s U.S. GAAP research and development expenses totaled $20.2 million for the year ending December 31, 2020 and $6.2 million for the three months ended March 31, 2021. LiveVox intends to increase its research and development team size over the near term to extend its opportunities for product innovation.

 

87


Table of Contents

Professional Services

LiveVox offers comprehensive professional services to its customers to assist in the successful implementation and optimization of the LiveVox products. LiveVox’s professional services include application configuration, system integration, business process optimization, technical support and training. LiveVox’s customers may use its professional services team for initial implementation of the LiveVox products or when expanding their use of LiveVox’s application suite.

Being cloud-native reduces implementation time and complexity by removing the need for on-premise hardware or dedicated infrastructure. LiveVox believes that it can deploy and optimize its products in significantly less time than required for deployments of legacy on-premise contact center systems. Because of this, LiveVox’s professional services engagements typically focus on optimization and process improvement, rather than installation or logistics. A full contact center suite of products can be implemented by LiveVox in as little as three weeks as compared to what LiveVox believes to be as much as six months for its competitors.

Technology and Operations

LiveVox’s highly scalable SaaS platform was developed with the end customer in mind. LiveVox’s platform uses market-oriented research, as well as development and operational experience. LiveVox’s platform is comprised of in-house developed intellectual property, and open source and commercially available components. LiveVox’s platform is designed to be redundant and scalable, to leverage cloud-native capabilities in support of business continuity and disaster recovery (BCDR) functionality, and to support multi-tenancy from the ground up. In addition, the architecture is designed to support capacity increases on-demand, continuous integration and continuous development (CI/CD), and life cycle management with minimal or no impact to customers’ use of LiveVox’s products.

LiveVox currently delivers its products globally from five public cloud third-party data center facilities located in Virginia, Ohio, Oregon, Canada, and Germany, and one third-party co-location facility in New York. LiveVox’s infrastructure is designed to support real-time mission-critical telecommunications, applications, and operational support systems as well as multiple customer connectivity methods over carrier services as well as direct connect. LiveVox’s infrastructure is built with redundant, fault-tolerant components in distinct and secure availability zones forming protective layers for LiveVox’s applications and customer data.

LiveVox has implemented and maintained an operations team that focuses on four primary pillars: capacity management, performance, security, and availability. The 24x7x365 operations teams ensure continuous health and reliability by monitoring LiveVox’s data centers, applications, and carrier services for potential issues, capacity management, potential security incidents, and the overall health and integrity of LiveVox’s platform environments.

Competition

LiveVox believes that the cloud-based customer engagement and communications industry is highly competitive, and it expects competition to increase in the future. LiveVox faces competition from established providers as well as emerging startups focusing on niche services and channels. LiveVox’s key competitors include:

 

   

traditional on-premise hardware business communications providers such as Avaya Inc., Aspect Software, Cisco Systems, Inc., Mitel Networks Corporation, and partners that resell or license their software;

 

   

cloud-based contact center software providers such as Five9, NICE InContact, Genesys, Serenova, 8x8, RingCentral and Talkdesk;

 

   

digital engagement providers such as eGain Corporation, Lithium Technologies and LivePerson; and

 

   

developer-focused software providers such as Amazon, and Twilio.

 

88


Table of Contents

Most of LiveVox’s direct competitors have greater name recognition, longer operating histories, more diversified customer bases and larger marketing and development budgets. As a result, these competitors may have greater credibility with LiveVox’s existing and potential customers and may be better able to withstand an extended period of downward pricing pressure. Additionally, with cloud-deployment gaining ever more adherents and technology advancing rapidly, LiveVox expects intensified competition in the future.

LiveVox believes the principal competitive factors in its markets include, but are not limited to:

 

   

platform reliability and scalability

 

   

breadth and depth of platform features

 

   

compliance and security capabilities

 

   

ease of administration, integration, and use

 

   

ease and speed of deployment

 

   

domain expertise in contact center operations

 

   

strength of third-party partnership ecosystem

 

   

artificial intelligence capabilities

 

   

scale and expertise offered to the growing market for customer engagement and contact center services

Intellectual Property

LiveVox protects its proprietary information through a combination of contractual agreements (containing confidentiality provisions and licensing restrictions) and trade secret laws. LiveVox protects its brand through contractual provisions that require LiveVox’s consent before use of its brand, as well as through trademark registrations. Additionally, all LiveVox employees sign agreements containing confidentiality and intellectual property assignment provisions, whereby any intellectual property they might develop as LiveVox employees is to be assigned to LiveVox.

As of March 31, 2021, LiveVox’s intellectual property portfolio included four registered U.S. trademarks, three pending trademark applications, and one issued U.S. patent.

LiveVox uses third-party technology to support its software platform under various license agreements with those third parties. These license agreements contain standard and customary licensing rights to use the technology. Third-party infringement claims pertaining to this third-party technology could have a disruptive effect on LiveVox’s operations.

Seasonality

LiveVox believes that there can be seasonal factors that may cause its revenues in the first half of a year to be lower than its revenues in the second half of the year. During 2020, 2019, 2018 and 2017, 52%, 53%, 52%, and 52% of LiveVox’s total revenues were generated in the second half of each year. LiveVox believes this is due to increased activities in retail, healthcare and education in the second half of each year.

Employees

LiveVox’s workforce is an integral part of its success, with a team of professionals including those focused on technology and operations, research and development, sales and marketing and general and administrative functions. LiveVox’s culture focuses on trust and communication and empowers employees by focusing on a team structure that drives individual leadership and leverages the latest technology to help power its business

 

89


Table of Contents

success. LiveVox is mindful of diversity during the recruiting and retaining process and believes that diversity is key to LiveVox’s culture and long-term success. LiveVox strives to foster a supportive environment that cultivates professional growth and encourages employees to continuously develop their skills. LiveVox considers its relationship with employees to be vital, and it is focused on effective attraction, development, and retention of, and compensation to, human resource talent and creating a best place to work. As of March 31, 2021, LiveVox’s workforce consisted of 535 full-time employees, comprising 211 in technology and operations, 139 in research and development, 135 in sales and marketing and 50 in general and administrative. LiveVox’s employee relations record is strong; none of its employees are covered by collective bargaining agreements nor has LiveVox ever experienced any work stoppages.

Regulatory

The following summarizes important, but not all, regulations that could impact LiveVox’s operations. Regulations are subject to judicial proceedings and to legislative and administrative proposals that could materially affect how LiveVox and others in its industry operate. The specific impact, however, cannot be predicted at this time.

The Federal Communications Commission (“FCC”) has jurisdiction over interstate and international telecommunications services and VoIP telephony in the U.S. The FCC has not classified all Internet Protocol (“IP”) — enabled or Voice over Internet Protocol (“VoIP”) communications services as unregulated information services or as regulated telecommunications services. Based on the nature of LiveVox’s IP-enabled services, it believes that many of those services are information services. Nonetheless, LiveVox acknowledges that the regulatory classification of IP-enabled services remains uncertain, and changes to the regulatory treatment of IP-based communications services could significantly affect LiveVox’s business.

LiveVox is registered with the FCC to begin providing interconnected VoIP services in the second half of 2021. The FCC has imposed various regulatory requirements on interconnected VoIP providers that previously applied only to traditional telecommunications providers, such as obligations to provide 911 functionality, to contribute to the federal universal service fund, to comply with regulations relating to local number portability, to abide by the FCC’s service discontinuance rules, to contribute to the Telecommunications Relay Services fund and to abide by the regulations concerning Customer Proprietary Network Information, outage reporting, access for persons with disabilities, the Communications Assistance for Law Enforcement Act and expanded obligations with respect to the transmission of emergency calls. In some instances, these regulations indirectly affect LiveVox because they directly apply to its customers or its suppliers. LiveVox cannot predict whether the FCC will impose additional requirements, regulations or charges upon interconnected VoIP services or other services that may include some voice functionality. LiveVox’s IP-enabled services (including where applicable interconnected VoIP services), or customers who use such services, are or may be subject to some or all of the following regulations:

 

   

The Telephone Consumer Protection Act of 1991 (TCPA), which regulates the use of automatic telephone dialing systems and artificial or prerecorded voice technologies to place calls and texts to wireless and residential landline telephone numbers. The FCC, the Federal Trade Commission and state attorneys general have the authority to enforce compliance with the TCPA. Moreover, the TCPA also allows aggrieved private parties to directly seek civil remedies and seek statutory-defined damages, which may be significant, for calls or text messages received without recipients’ proper consent. The scope and interpretation of these laws and regulations is inconsistent and continues to evolve and develop.

 

   

The TRACED Act, which is designed to limit “robocalls” to consumers through a variety of mechanisms, such as call authentication requirements. The TRACED Act directs the FCC to conduct a number of different rulemaking proceedings and increases the FCC’s enforcement authority. The FCC adopted new rules and is conducting several proceedings to understand and address fraud and abuse in the form of illegal robocalling, and LiveVox is continuing to assess the impact of such proceedings and

 

90


Table of Contents
 

subsequent regulations on its business. Currently, recently adopted rules allow carriers to block certain calls that they determine to be unlawful or unwanted. The TRACED Act also revised the FCC’s ability to enforce the TCPA, and LiveVox cannot predict the impact of the recent rules adopted by the FCC or what the impact of new rules may be on its business at this time.

 

   

The Telemarketing Sales Rule, which governs the manner of telemarketing outreach.

 

   

FCC Universal Service regulations, which implement universal service support for access to communications services in rural and high-cost areas and to low-income consumers at reasonable rates; and access to advanced communications services by schools, libraries and rural health care providers. Any change in the FCC assessment methodology may affect LiveVox’s revenue and expenses, but at this time, it is not possible to predict the extent LiveVox would be affected, if at all.

 

   

Federal Trade Commission enforcement authority and regulations, which generally relate to advertising, privacy practices, and avoiding unfair and deceptive trade practices.

 

   

The Fair Debt Collections Practices Act (FDCPA), which governs the manner of third-party debt collections.

 

   

Various privacy and data protection regulations such as the Health Insurance Portability and Accountability Act (HIPAA), General Data Protection Regulation (GDPR), and California Consumer Privacy Act (CCPA).

 

   

Consumer Financial Protection Bureau (CFPB) regulations

 

   

Office of the Comptroller of Currency (OCC) regulations

 

   

Various State Regulations LiveVox may also be subject to state laws and regulations affecting certain communications services or other parts of its business, including for example state requirements that are similar to the types of federal requirements discussed above.

 

   

Various International Regulations To the extent that LiveVox provides products or services internationally, it is subject to additional foreign regulations that may be ambiguous or more restrictive than domestic law and regulations, such as the GDPR.

The application and interpretation of the federal, state, and international laws and regulations to which LiveVox, its products and its customers are subject are often uncertain, particularly given the new and rapidly evolving industry in which LiveVox operates. Because these federal, state, and international laws and regulations have continued to develop and evolve rapidly, it is possible that LiveVox or its customers may not be, or may not have been, compliant with all applicable laws or regulations. If LiveVox or its customers do not comply with current or future rules or regulations that apply to their respective businesses, LiveVox and its customers may face reputational harm, fines, penalties, investigations, forfeitures, costs, and operational restrictions and LiveVox may have to restructure its products, create new products, and otherwise adapt to the changing legal and regulatory landscape, all of which could adversely affect its business operations. See “Risk Factors — Risks Related to Our Business and Industry” for more information.

Legal Proceedings

LiveVox is currently, and from time to time may become, involved in legal or regulatory proceedings arising in the ordinary course of its business, including tort claims, employment disputes and commercial contract disputes. Although the outcome of such claims cannot be predicted with certainty, LiveVox is not currently a party to any litigation or regulatory proceeding that would reasonably be expected to be material to LiveVox’s business, results of operations, financial condition or cash flows.

 

91


Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” appearing elsewhere in this prospectus. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “LiveVox,” “the Company” or “our” are intended to mean the business and operations of LiveVox Holdings, Inc. and its consolidated subsidiaries.

Overview

LiveVox, Inc. was first incorporated in Delaware in 1998 under the name “Tools for Health” and in 2005 changed its name to “LiveVox, Inc.” LiveVox’s mission is to enable next-generation cloud contact center experiences. LiveVox offers a cloud contact-center-as-a-service (or CCaaS) platform for business processing outsourcing (BPO) organizations, enterprises, and collections agencies. Its offerings include omnichannel and artificial intelligence (AI), customer relationship management (CRM) and workforce optimization (WFO). LiveVox’s platform provides customers with a scalable, cloud-based architecture and pre-integrated AI capabilities to support enterprise-grade deployments. Additionally, LiveVox’s platform features a native CRM, which unifies disparate, department-level systems of record to present contact center agents with a single view of its customers. LiveVox has built a differentiated approach to the contact center software market and is complemented by an attractive financial model. Key highlights of LiveVox’s business and market opportunity include:

 

   

Large and growing CCaaS market opportunity: The contact center market is in the early stages of a shift to cloud-based solutions and LiveVox estimates that the vast majority of contact call center agents are not using cloud-based solutions today. Various trends are driving this transition, including digital transformation, the automation of manual contact center labor, and the need for AI-enabled analytics to support omnichannel workflows and agents. LiveVox estimates this market to be approximately $27 billion for 2020, of which approximately $5 billion is comprised of cloud-based solutions. LiveVox and other industry sources estimate the total spend to reach approximately $83 billion by 2030. As enterprises continue to execute on their digital transformation strategies, LiveVox is well positioned to capture a meaningful amount of this growth as it increases its investment in sales and marketing to educate more potential customers on its platform.

 

   

Differentiated product: LiveVox offers a cloud-based, enterprise-focused contact center solution. The LiveVox platform consists of innovative cloud-based AI and omnichannel offerings, anchored by its native CRM solution. LiveVox’s products are designed to enable customers to remove legacy technology barriers and accelerate adoption of cloud-based solutions, regardless of digital transformation journey status. LiveVox’s platform is configured with features and functionalities as well as compliance standards and capabilities, and integrations with many existing third-party solutions, providing customers with a simple and scalable implementation process. LiveVox believes that its integrated offering accelerates the adoption of cloud-based contact center solutions, eliminates data silos, and allows its users to maximize engagement with their customers and create differentiated end user experiences. LiveVox believes that it is currently the only company to offer a product that integrates Omnichannel, Contact Center, CRM, WFO and AI capabilities in a single offering.

 

   

Attractive financial profile, underpinned by several qualities:

 

   

Recurring revenue model: LiveVox’s revenue model consists of approximately 99% recurring revenue. For the years ended December 31, 2020, 2019, 2018 and 2017, LiveVox’s revenues were

 

92


Table of Contents
 

$102.5 million, $92.8 million, $77.2 million and $60.6 million, respectively, representing year-over-year growth of 10%, 20% and 27%, respectively. LiveVox’s Adjusted EBITDA for the years ended December 31, 2020, 2019, 2018 and 2017 was $8.5 million, $13.3 million, $11.0 million and $3.8 million, respectively. For the three months ended March 31, 2021, LiveVox’s revenues and Adjusted EBITDA were $27.9 million and $(0.2) million, respectively.

 

 

LOGO

 

   

Attractive unit economics: LiveVox benefits from strong sales efficiency, driven by the productivity of its salesforce and flexible commercial model. This model seeks to meet customers at any stage of their digital transformation by utilizing a “land and expand” strategy that allows LiveVox to provide a subset of its full contact center solution to meet the initial requirement, and then expand that relationship by providing more features and functionality that empowers the customer to continue on their journey to greater digital and AI adoption. For the twelve months ended March 31, 2021 and March 31, 2020, LiveVox’s Last Twelve Months (“LTM”) Net Revenue Retention Rates were 99% and 118%, respectively. For the twelve months ended December 31, 2020 and December 31, 2019, the Company’s LTM Net Revenue Retention Rates were 106% and 118%, respectively. For the three months ended March 31, 2021, LiveVox’s LTM Net Revenue Retention Rate was 99%. Notwithstanding for the impact of COVID-19 on fiscal 2020, LiveVox’s average net revenue retention rate was 115% over the period 2017 to 2020. These qualities contribute to attractive unit economics. LiveVox estimates that the average calculated lifetime value of LiveVox’s customers is approximately seven times the associated cost of acquiring them for the time period from 2017 to 2020.

 

   

Resilience: LiveVox has not experienced a sustained disruption in its overall business as a result of COVID-19. In the first half of fiscal 2020, LiveVox’s usage-based revenues were impacted due to lower volumes, although usage revenue returned to growth in the second half of fiscal 2020. The most recent stimulus packages designed to address the COVID-19 pandemic have allowed our customers to meet their goals with less effort. As a result, usage revenue declined sequentially from the fourth quarter of fiscal 2020 to the first quarter of fiscal 2021, but the relationship

 

93


Table of Contents
 

between contracted revenue and usage revenue is expected to recover to normal levels when the effects of the pandemic have completely dissipated. LiveVox’s contracted revenues (comprising approximately two thirds of LiveVox’s overall revenue) has grown at least 18% in each quarter of fiscal 2020 compared to the respective quarters of fiscal 2019. In the second half of fiscal 2020, LiveVox’s business rebounded to normalized levels of growth, and its bookings outperformed its budgeted plan for fiscal 2020 (that was set in fiscal 2019 and not subsequently adjusted). In the first quarter of fiscal 2021, LiveVox’s contracted revenues grew 23% over the first quarter of fiscal 2020.

Our subscription revenue model includes contracted revenue and usage revenue, recognized on a monthly basis following deployment to the customer. Our revenue model consists of an optimized combination of contracted billing and usage-based billing, with products delivered through bundles that are designed to provide flexibility for customers at any stage of their cloud journey. Our contracted revenue is predominantly comprised of minimum contracted usage billing that is billed regardless of consumption, as well as our newer per-seat per-month fees. Usage revenue is billed for customer consumption above their contracted minimum, and a premium pricing model applies to this revenue exceeding contracted minimums. In addition, the minimum commitment helps drive upsell, and customers frequently move agents and units of service onto our platform as a trial, and then remain. Our contracted revenues (comprising approximately two thirds of our overall revenue) have grown at least 15% on a year-over-year basis for the last 11 quarters.

We leverage a land and expand sales model, focusing on “landing” agreements with large enterprises, and selling additional products and units of service over time. Our net revenue retention rate averaged 115% for the years ended December 31, 2017 to 2020, indicating a strong track record of growing revenue from existing customers. Going forward, we have identified opportunities we believe will allow us to expand our revenue from existing customers based on seats not currently using our software. Additionally, considerable upsell opportunity currently exists, with approximately 40% of customers using only one product as of March 31, 2021.

Our go-to-market strategy is led by a direct sales force. This team is primarily focused on enterprise and mid-market organizations, which LiveVox defines as organizations with (i) greater than 50 seats and (ii) the estimated potential to spend at least $5,000 per month on LiveVox’s services. We divided the team into three groups: (i) the National team composed of “Hunters” and “Farmers” focused on accounts greater than or equal to 250 seats (which we consider large accounts), (ii) the Mid-market Sales team composed of “Hunters” and “Farmers” focused on accounts between 50 and 250 seats as well as accounts where we estimate we do not have potential to increase the amount of business we do with such customer and (iii) an overlay team focused on facilitating channel leads and/or specific products on an as needed basis. “Hunters” are responsible for new logo generation and may keep accounts with upsell potential for the first year following initial booking. “Farmers” are responsible for upsell and retention following the transition from a “Hunter”. The overlay teams are responsible for assisting the “Hunters” in meeting the objectives for their area of expertise. In addition, we are investing in initiatives to grow our team of business consultants, technical account managers and customer success managers, build out our marketing capabilities, and continue to improve salesforce productivity.

Impact of COVID-19

While impacts associated with COVID-19 had certain adverse impacts on our business and operating results in the first two quarters of fiscal 2020, we have not experienced a sustained disruption in our overall business. In March 2020, we began to take measures to minimize disruptions to our products as a result of COVID-19. These measures included the drawdown on our revolving Credit Facility (as defined below) in the amount of $4.7 million on March 17, 2020. Additionally, we provided temporary relief to certain customers with business models that were impacted by COVID-19 and were not setup to work from home by removing contracted minimums in return for extending contract lengths to enable financial relief during the time required to transition to work from home agent models. This relief did not have a material impact on our financial results.

 

94


Table of Contents

In the first half of fiscal 2020, our usage-based revenues were impacted due to lower volumes. Our new revenue bookings (which we describe as “land” bookings) in the first quarter of fiscal 2020 were impacted by the pandemic, as many customers delayed new bookings to evaluate the impact of COVID-19 on their business models. However, revenue bookings from existing customers (which we describe as “expand” bookings) remained healthy over this period. Churn rates were temporarily elevated in the second quarter of fiscal 2020 as customers with business models that were severely impacted by COVID-19 ceased operations, including one of our top 10 customers by revenue.

In the second half of fiscal 2020 and the first quarter of fiscal 2021, our business improved, and our bookings outperformed our budgeted plan for such periods (which was set in fiscal 2019 and fiscal 2020 respectively and not subsequently adjusted). In the first quarter of fiscal 2021, the most recent stimulus packages designed to address the COVID-19 pandemic have allowed our customers to meet their goals with less effort. As a result, usage revenue declined sequentially from the fourth quarter of fiscal 2020 to the first quarter of fiscal 2021. When the effects of the pandemic have completely dissipated we expect the relationship between usage and contracted revenues to recover to normal levels. Our contracted revenues (comprising approximately two thirds of our overall revenue) grew 23% for the first quarter of fiscal 2021 compared to the first quarter of fiscal 2020.

In fiscal 2020 and the first quarter of fiscal 2021, we experienced a proportion of recurring revenue to contracted revenue that was lower than historical levels. We believe that when the impacts of COVID-19 dissipate, our usage above contracted minimums and therefore the proportion of recurring revenue to contracted revenue will return to normalized historical levels. Our methodology for assessing normalized revenue adjusts for the variability in available dialing days in each monthly period and also accounts for reduced dialing behavior on weekends and holidays. Contracted revenue does not vary due to available dialing days.

Key Factors and Trends Affecting Our Business

Going forward, we expect our business to continue to be driven by the following factors:

 

   

Market penetration of cloud contact center solutions: We view the market opportunity for cloud-based contact center solutions as significant. Factors such as remote working, digital transformation, and the shift to value-added services at the contact center level have driven a shift from on-premise to cloud-based solutions. We intend to continue investing in sales and marketing to reach new customers and expand our market position.

 

   

Product leadership: We have evolved from an outbound-focused software platform provider for collections agencies to an integrated omnichannel platform that addresses all aspects of the agent experience. We will continue to invest in new technologies and harness existing ones.

 

   

Investments in growth: We are growing our team of customer success managers and field-based representatives, building our marketing capabilities to expand our reach, and investing in initiatives to improve salesforce productivity.

 

   

Usage of our products: We employ a mix of contracted and usage-based revenue that is unique in our market. Thus, we depend on usage-based revenue for a component of our revenue. This stream of revenue provides additional upside, and over a long period of time, has generally been stable. In addition, this usage-based revenue stream allows us to grow with our customers as they scale.

LiveVox’s Segments

LiveVox has determined that its Chief Executive Officer is its chief operating decision maker. LiveVox’s Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of assessing performance and making decisions on how to allocate resources. Accordingly, LiveVox has determined that it operates in a single reportable segment.

 

95


Table of Contents

Key Operating and Non-GAAP Financial Performance Metrics

In addition to measures of financial performance presented in our consolidated financial statements, we monitor the key metrics set forth below to help us evaluate growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational efficiencies.

LTM Net Revenue Retention Rate

We believe that our LTM Net Revenue Retention Rate provides us and investors with insight into our ability to retain and grow revenue from our customers and is a meaningful measure of the long-term value of our customer relationships. LiveVox calculates LTM Net Revenue Retention Rate by dividing the recurring revenues recognized during the most recent LTM period by the recurring revenues recognized during the LTM period immediately preceding the most recent LTM period, provided, however, that recurring revenues from any customer in the most recent LTM period are excluded from the calculation if recurring revenues were not recognized from such customer in the preceding LTM period. Customers who cease using LiveVox’s products during the most recent LTM period are included in the calculation, but new customers who begin using LiveVox’s products during the most recent LTM period are not included in the calculation. For example, LTM Net Revenue Retention for the 12-month period ending December 2020 includes recurring revenues from all customers for whom revenues were recognized in 2019 regardless of whether such customers increased, decreased, or stopped their use of LiveVox’s products during 2020 (i.e., old customers), but exclude all recurring revenues from all customers who began to use LiveVox’s services during 2020 (i.e., new customers). We define monthly recurring revenue as recurring monthly contracted and usage revenue, which we calculate separately from one-time, non-recurring revenue by month by customer. We consider all contracted and usage-based revenue, which represents 99% of our revenue to be recurring revenue as all of our contracts provide for a minimum commitment amount. We consider professional services revenue and one-time adjustments, which are booked on a one-time, nonrecurring basis, to be non-recurring revenue. Professional services and other one-time adjustments are generally not material to the result of the calculation. However, one-time non-recurring revenue is important with respect to timing as we bill installation and non-standard statement of work fees immediately and recognize the revenue as the work is completed, which is generally in advance of the beginning of recurring revenue.

The following table shows our LTM Net Revenue Retention Rate for the periods presented:

 

     Twelve Months Ended
March 31,
    Twelve Months Ended
December 31,
 
     2021     2020     2020     2019  

LTM Net Revenue Retention Rate

     99     118     106     118

Our LTM Net Revenue Retention Rate reflects the expansion over time of our existing customers as they add new products and additional units of service. A much higher percentage of our customers are contracted on our variable per minute pricing model with a minimum commitment as compared to our per agent pricing model with minimum commitments for both agents and units of service.

Our LTM Net Revenue Retention Rate decreased by 19%, to 99% in the twelve months ended March 31, 2021 from 118% in the twelve months ended March 31, 2020 primarily as a result of the impacts of COVID-19 in combination with contracted and usage revenue mix. Despite the decline in LTM Net Revenue Retention Rate, monthly minimum contracted revenue for customers grew by 25% from the end of the first quarter of fiscal 2020 to the end of the first quarter of fiscal 2021.

Our LTM Net Revenue Retention Rate decreased by 12%, to 106% in the twelve months ended December 31, 2020 from 118% in the twelve months ended December 31, 2019 primarily as a result of the impacts of COVID-19 in combination with contracted and usage revenue mix. Despite the decline in LTM Net Revenue Retention Rate, monthly minimum contracted revenue for customers grew by 20% from fiscal 2019 to fiscal 2020.

 

96


Table of Contents

Adjusted EBITDA

We monitor Adjusted EBITDA, a non-generally accepted accounting principle (“Non-GAAP”) financial measure, to analyze our financial results and believe that it is useful to investors, as a supplement to U.S. GAAP measures, in evaluating our ongoing operational performance and enhancing an overall understanding of our past financial performance. We believe that Adjusted EBITDA helps illustrate underlying trends in our business that could otherwise be masked by the effect of the income or expenses that we exclude from Adjusted EBITDA. Furthermore, we use this measure to establish budgets and operational goals for managing our business and evaluating our performance. We also believe that Adjusted EBITDA provides an additional tool for investors to use in comparing our recurring core business operating results over multiple periods with other companies in our industry.

Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP, and our calculation of Adjusted EBITDA may differ from that of other companies in our industry. We compensate for the inherent limitations associated with using Adjusted EBITDA through disclosure of these limitations, presentation of our consolidated financial statements in accordance with U.S. GAAP and reconciliation of Adjusted EBITDA to the most directly comparable U.S. GAAP measure, net income (loss). We calculate Adjusted EBITDA as net income (loss) before (i) depreciation and amortization, (ii) stock-based compensation, (iii) interest income, expense and other, (iv) provision (benefit from) for income taxes, and (v) other items that do not directly affect what we consider to be our core operating performance.

The following table shows a reconciliation of net income (loss) to Adjusted EBITDA for the periods presented (in thousands):

 

     Three Months Ended
March 31, (unaudited)
 
     2021      2020  

Net loss

   $ (4,175    $ (553

Non-GAAP adjustments:

     

Depreciation and amortization

     1,604        1,516  

Long-term equity incentive bonus and stock-based compensation expense

     139        184  

Interest expense, net

     944        984  

Other expense (income), net

     (7      132  

Acquisition and financing related fees and expenses

     284        25  

Transaction-related costs

     733        —  

Golden Gate Capital management fee expenses

     171        156  

Provision for income taxes

     35        60  
  

 

 

    

 

 

 

Adjusted EBITDA

   $ (272    $ 2,504  
  

 

 

    

 

 

 

Non-GAAP Gross Profit and Non-GAAP Gross Margin percentage

U.S. GAAP defines gross profit as revenue less cost of revenue. Cost of revenue includes all expenses associated with our various product offerings as more fully described under the caption “Components of LiveVox’s Results of Operations — Cost of Revenue” below. We define Non-GAAP gross profit as gross profit after adding back the following items:

 

   

depreciation and amortization;

 

   

long-term equity incentive bonus and stock-based compensation expense; and

 

   

other non-recurring expenses

We add back depreciation and amortization, long-term equity incentive bonus and stock-based compensation expense and other non-recurring expenses because they are one-time or non-cash items. We

 

97


Table of Contents

eliminate the impact of these one-time or non-cash items because we do not consider them indicative of our core operating performance. Their exclusion facilitates comparisons of our operating performance on a period-to-period basis. Therefore, we believe showing gross margin, as Non-GAAP to remove the impact of these one-time or non-cash expenses is helpful to investors in assessing our gross profit and gross margin performance in a way that is similar to how management assesses our performance.

We calculate Non-GAAP gross margin percentage by dividing Non-GAAP gross profit by revenue, expressed as a percentage of revenue.

Management uses Non-GAAP gross profit and Non-GAAP gross margin percentage to evaluate operating performance and to determine resource allocation among our various product offerings. We believe Non-GAAP gross profit and Non-GAAP gross margin percentage provide useful information to investors and others to understand and evaluate our operating results in the same manner as our management and board of directors and allows for better comparison of financial results among our competitors. Non-GAAP gross profit and Non-GAAP gross margin percentage may not be comparable to similarly titled measures of other companies because other companies may not calculate Non-GAAP gross profit and Non-GAAP gross margin percentage or similarly titled measures in the same manner as we do.

The following table shows a reconciliation of gross profit to Non-GAAP gross margin percentage for the periods presented (in thousands):

 

     Three Months Ended
March 31, (unaudited)
 
     2021     2020  

Gross profit

   $ 16,765     $ 16,547  

Depreciation and amortization

     944       969  

Long-term equity incentive bonus and stock-based compensation expense

     14       14  
  

 

 

   

 

 

 

Non-GAAP gross profit

   $ 17,723     $ 17,530  

Non-GAAP gross margin %

     63.4     66.1

Components of LiveVox’s Results of Operations

Revenue

LiveVox derives revenues by providing products under a variety of pricing models. Voice has been historically provided under a usage-based pricing model with prices calculated on a per-minute basis with a contracted minimum commitment in accordance with the terms of the underlying pricing agreements. Voice is LiveVox’s predominant source of revenue. Other revenue sources are derived from products under the following pricing models:

 

  1)

a per “unit of measure” with a minimum commitment (e.g., Speech IQ);

 

  2)

the combination of per agent and per “unit of measure” models with minimum contracted commitments for each (e.g., SMS, email, U-CRM services);

 

  3)

a per agent pricing model with a minimum agent commitment (e.g., U-Script, U-Ticket, U-Chat, U-Quality Management, U-Screen Capture, U-CSAT, U-BI); and

 

  4)

a per agent pricing model with a minimum agent commitment with a monthly maximum commitment (e.g., PDAS–our compliance product, U-BI).

Outside of Voice, our pricing models detailed above are relatively new to the market and are not yet material to our business from a financial perspective.

 

98


Table of Contents

Cost of Revenue

Our cost of revenue consists of personnel costs and associated costs such as travel, information technology, facility allocations and stock-based compensation for Implementation and Training Services, Customer Care, Technical Support, Professional Services, User Acceptance Quality Assurance, Technical Operations and VOIP services to our customers. Other costs of revenue include non-cash costs associated with depreciation and amortization including acquired technology; charges from telecommunication providers for communications, data center costs and costs to providers of cloud communication services, software, equipment maintenance and support costs to maintain service delivery operations.

Our data center costs are transitioning from a model based on maintaining a co-location facility with our own capital equipment to a cloud strategy based on monthly recurring charges for capacity added in generally small step function increments. The transition began in fiscal 2019 and is expected to be complete in fiscal 2021. As a result, we have reduced our capital expenditures for data center equipment, which has slowed growth in depreciation and increased our data center costs for our cloud provisioning. We expect feature release efficiencies for our cloud operations as research and development resources eliminate the release effort associated with our co-location deployment. We have accelerated depreciation expense associated with the change in useful life estimate of the co-location facility.

As our business grows, we expect to realize economies of scale in our cost of revenue. We use the LiveVox platform to facilitate data-driven innovations to identify and facilitate efficiency improvement to our implementation, customer care and support, and technical operations teams. Additionally, our research and development priorities include ease of implementation, reliability and ease of use objectives that reduce costs and result in economies of scale relative to revenue growth.

Operating Expenses

We classify our operating expenses as sales and marketing, general and administrative, and research and development.

Sales and Marketing. Sales and marketing expenses consist primarily of salaries and related expenses, including stock-based compensation, for personnel in sales and marketing, sales commissions, travel costs, as well as marketing pipeline management, content delivery, programs, campaigns, lead generation, and allocated overhead. We believe it is important to continue investing in sales and marketing to continue to generate revenue growth, and we expect sales and marketing expenses to increase in absolute dollars and fluctuate as a percentage of revenue as we continue to support our growth initiatives.

General and Administrative. General and administrative expenses consist primarily of salary and related expenses, including stock-based compensation, for management, finance and accounting, legal, information systems and human resources personnel, professional fees, compliance costs, other corporate expenses and allocated overhead. We expect that general and administrative expenses will fluctuate in absolute dollars from period to period but decline as a percentage of revenue over time.

Research and Development. Research and development expenses consist primarily of salary and related expenses, including stock-based compensation, for personnel related to the identification and development of improvements and expanded features for our products, as well as quality assurance, testing, product management and allocated overhead. Research and development costs are expensed as incurred. We have not performed research and development for internal-use software that would meet the qualifications for capitalization. We believe it is important to continue investing in research and development to continue to expand and improve our products and generate future revenue growth, and we expect research and development expenses to increase in absolute dollars and fluctuate as a percentage of revenue as we continue to support our growth initiatives.

 

99


Table of Contents

Results of Operations

The following tables summarize key components of LiveVox’s results of operations for the periods indicated (in thousands, except per share data):

 

     Three Months Ended
March 31, (unaudited)
 
     2021      2020  

Revenue

   $ 27,945      $ 26,519  

Cost of revenue

     11,180        9,972  
  

 

 

    

 

 

 

Gross profit

     16,765        16,547  

Operating expenses

     

Sales and marketing expense

     8,908        8,119  

General and administrative expense

     4,880        3,066  

Research and development expense

     6,180        4,738  
  

 

 

    

 

 

 

Total operating expenses

     19,968        15,923  
  

 

 

    

 

 

 

Income (loss) from operations

     (3,203      624  

Interest expense, net

     944        984  

Other expense (income), net

     (7      132  
  

 

 

    

 

 

 

Total other expense, net

     937        1,116  
  

 

 

    

 

 

 

Pre-tax income loss

     (4,140      (492

Provision for income taxes

     35        61  
  

 

 

    

 

 

 

Net loss

   $ (4,175    $ (553

Net loss per share — basic and diluted

   $ (4,175    $ (553

Weighted average shares outstanding — basic and diluted

     1        1  
  

 

 

    

 

 

 

Comparison of the three months ended March 31, 2021 and 2020 (in thousands)

Revenue

 

     Three Months Ended
March 31, (unaudited)
               
     2021      2020      $ Change      % Change  

Revenue

   $ 27,945      $ 26,519      $ 1,426        5.4
  

 

 

    

 

 

    

 

 

    

 

 

 

Revenue increased by $1.4 million, or 5.4%, to $27.9 million in the three months ended March 31, 2021 from $26.5 million in the three months ended March 31, 2020, primarily due to the acquisition of new customers and upsells to our existing customer base. The recent stimulus packages designed to address the COVID-19 pandemic have allowed our customers to meet their goals with less effort, reducing usage volumes which were more than offset by 23% growth in contracted revenue.

Cost of revenue

 

     Three Months Ended
March 31, (unaudited)
              
     2021     2020     $ Change      % Change  

Cost of revenue

   $ 11,180     $ 9,972     $ 1,208        12.1
  

 

 

   

 

 

   

 

 

    

 

 

 

% of revenue

     40.0     37.6     

 

100


Table of Contents

Cost of revenue increased by $1.2 million, or 12.1%, to $11.2 million in the three months ended March 31, 2021 from $10.0 million in the three months ended March 31, 2020. The increase was attributable primarily to increases in cloud data center costs.

Gross profit

 

     Three Months Ended
March 31, (unaudited)
              
     2021     2020     $ Change      % Change  

Gross profit

   $ 16,765     $ 16,547     $ 218        1.3
  

 

 

   

 

 

   

 

 

    

 

 

 

Gross margin percentage

     60.0     62.4     

Gross profit increased by $0.2 million, or 1.3%, to $16.7 million in the three months ended March 31, 2021 from $16.5 million in the three months ended March 31, 2020. The increase in gross profit was a result of higher revenue that offset the increased cloud data center costs we experienced while transitioning from our co-location deployment.

Sales and marketing expense

 

     Three Months Ended
March 31, (unaudited)
              
         2021             2020         $ Change      % Change  

Sales and marketing expense

   $ 8,908     $ 8,119     $ 789        9.7
  

 

 

   

 

 

   

 

 

    

 

 

 

% of revenue

     31.9     30.6     

Sales and marketing expense increased by $0.8 million, or 9.7%, to $8.9 million in the three months ended March 31, 2021 from $8.1 million in the three months ended March 31, 2020. The increase was primarily due to increased personnel costs of $1.4 million and higher marketing, promotions and tradeshows of $0.2 million. These increases were partially offset by decreased travel costs of $0.5 million and decreased miscellaneous sales and marketing costs of $0.5 million.

General and administrative expenses

 

     Three Months Ended
March 31, (unaudited)
              
         2021             2020         $ Change      % Change  

General and administrative expense

   $ 4,880     $ 3,066     $ 1,814        59.2
  

 

 

   

 

 

   

 

 

    

 

 

 

% of revenue

     17.5     11.6     

General and administrative expenses increased by $1.8 million, or 59.2%, to $4.9 million in the three months ended March 31, 2021 from $3.1 million in the three months ended March 31, 2020. The increase was primarily for accounting, audit and legal fees of $0.8 million in preparation to become a public company. Additionally, personnel costs increased $0.7 million, and office space expenses increased $0.3 million.

Research and development expense

 

     Three Months Ended
March 31, (unaudited)
              
         2021             2020         $ Change      % Change  

Research and development expense

   $ 6,180     $ 4,738     $ 1,442        30.4
  

 

 

   

 

 

   

 

 

    

 

 

 

% of revenue

     22.1     17.9     

 

101


Table of Contents

Research and development expenses increased by $1.5 million, or 30.4%, to $6.2 million in the three months ended March 31, 2021 from $4.7 million in the three months ended March 31, 2020. The increase was primarily due to increased personnel costs of $1.0 million, driven by increased headcount and above average salary increases to retain certain essential employees. Additionally, computing costs used in the development of software increased $$0.4 million.

Interest expense, net

 

     Three Months Ended
March 31, (unaudited)
              
         2021             2020         $ Change      % Change  

Interest expense, net

   $ 944     $ 984     $ (40      (4.1 ) % 
  

 

 

   

 

 

   

 

 

    

 

 

 

% of revenue

     3.4     3.7     

Interest expense, net decreased by $0.04 million, or 4.1%, to $0.94 million in the three months ended March 31, 2021 from $0.98 million in the three months ended March 31, 2020. The decrease was attributable primarily to decreased interest expense of $0.07 million associated with the decreased outstanding principal amount of our term loan and the lower interest rates.

Liquidity and Capital Resources

Overview

As of March 31, 2021 and December 31, 2020, LiveVox held cash and cash equivalents of $14.2 million and $18.1 million. respectively. In addition, we had restricted cash of $0.1 million as of March 31, 2021 related to the holdback amount for one acquisition the Company made in 2019, and $1.5 million in restricted cash as of December 31, 2020 related to the holdback amount for the two acquisitions the Company made in 2019. LiveVox’s primary use of cash is for operation and administrative activities including employee related expenses, and general, operating and overhead expenses. Future capital requirements will depend on many factors, including our customer growth rate, customer retention, timing and extent of development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings, the continuing market acceptance of our products, effective integration of acquisition activities, and maintaining our bank credit facility. Additionally, the duration and extent of the impact from the COVID-19 pandemic continues to depend on future developments that cannot be accurately predicted at this time, such as the ongoing severity and transmission rate of the virus, the extent and effectiveness of vaccine programs and other containment actions, the duration of social distancing, office closure and other restrictions on businesses and society at large, and the specific impact of these and other factors on LiveVox’s business, employees, customers and partners. While the COVID- 19 pandemic has caused operational difficulties, and may continue to create unprecedented challenges, it has not thus far had a substantial net impact on the Company’s liquidity position.

On February 28, 2018, LiveVox entered into an amendment to its term loan and revolving credit facility with PNC Bank originally dated November 7, 2016 (as so amended, the “Credit Facility”) to provide for a $45.0 million term loan, a $5.0 million line of credit and a $1.5 million letter of credit sub-facility. The agreement governing the Credit Facility had a five-year term ending November 7, 2021. The Credit Facility is collateralized by a first-priority perfected security interest in substantially all the assets of LiveVox and is subject to certain financial covenants before and after a covenant conversion date. Covenant conversion may be elected early by LiveVox if certain criteria are met, including, but not limited to meeting fixed charge coverage and liquidity ratio targets as of the most recent twelve-month period. Prior to the covenant conversion date, LiveVox is required to maintain minimum levels of liquidity and recurring revenue. As of the covenant conversion date, LiveVox is required to maintain the Fixed Charge Coverage Ratio and Leverage Ratio (as defined in the Credit Facility) measured on a quarter-end basis for the four-quarter period ending on each such date through the end of the agreement.

 

102


Table of Contents

On December 16, 2019, LiveVox amended the Credit Facility (as amended, the “Amended Credit Facility”), increasing the term loan borrowing therein by $13.9 million to $57.6 million and amending certain terms and conditions. The Amended Credit Facility reset the minimum recurring revenue covenant and qualified cash amounts through December 31, 2021 and extended the quarterly measurement dates through September 30, 2023 and the maturity date to November 7, 2023. LiveVox was in compliance with all debt covenants at March 31, 2021 and December 31, 2020 and was in compliance with all debt covenants as of the date of issuance of these consolidated financial statements. There was no unused borrowing capacity under the term loan portion of the Amended Credit Facility at March 31, 2021 and December 31, 2020. On March 17, 2020, as a precautionary measure to ensure financial flexibility and maintain maximum liquidity in response to COVID-19 pandemic, LiveVox drew down approximately $4.7 million under the revolving portion of the Amended Credit Facility.

LiveVox’s consolidated financial statements have been prepared assuming LiveVox will continue as a going concern for the 12 months from the date of issuance of the consolidated financial statements, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. LiveVox’s main sources of liquidity were cash generated by operating cash flows and the term loan and revolving credit facility.

Acquisition Opportunities

We believe that there may be opportunity for further consolidation in our industry. From time to time, we evaluate potential strategic opportunities, including acquisitions of other providers of cloud-based services. We have been in, and from time to time may engage in, discussions with counterparties in respect of various potential strategic acquisition and investment transactions. Some of these transactions could be material to our business and, if completed, could be difficult to integrate, result in increased leverage or dilution and/or subject us to unexpected liabilities. In connection with evaluating potential strategic acquisition and investment transactions, we may incur significant expenses for the evaluation and due diligence investigation of these potential transactions.

Cash flow (in thousands)

 

     Three Months Ended
March 31,
(unaudited)
 
     2021      2020  

Net cash provided by (used in) operating activities

   $ (5,091    $ 415  

Net cash provided by (used in) investing activities

     1,136        (212

Net cash provided by (used in) financing activities

     (1,319      4,190  

Effect of foreign currency translation

     (21      (96
  

 

 

    

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

   $ (5,295    $ 4,297  
  

 

 

    

 

 

 

Net cash provided by (used in) operating activities

Cash flows from operating activities during the three months ended March 31, 2021 decreased by $5.5 million to $(5.1) million from $0.4 million during the same period in 2020. The decrease to net cash provided by (used in) operating activities was primarily attributable to a $3.6 million decrease to net loss and a decrease of $0.4 million in non-cash adjustments to net loss. These non-cash items primarily consisted of a $0.6 million decrease of bad debt expense being offset by a $0.1 million increase of amortization of deferred sales commissions. Net cash provided by (used in) operating activities has a decrease of $1.5 million in cash from operating assets and liabilities, primarily due to the accrued contingent considerations in asset acquisition.

 

103


Table of Contents

Net cash provided by (used in) investing activities

Cash flows from investing activities during the three months ended March 31, 2021 increased by $1.3 million to $1.1 million from $(0.2) million during the same period in fiscal 2020. Net cash provided by investing activities during the three months ended March 31, 2021 was comprised of $1.3 million in asset acquisition, offset by $0.2 million in purchases of property and equipment.

Net cash provided by (used in) financing activities

Cash flows from financing activities during the three months ended March 31, 2021 decreased by $5.5 million, or 131.5%, to $(1.3) million from $4.2 million during the same period in 2020, reflecting a $0.9 million increase of repayment on loan payable, offset by the drawdown on the revolving portion of the Amended Credit Facility of $4.7 million in March of 2020.

Contractual Obligations and Commitments

Our principal contractual obligations consist of future payment obligations under our term loan, finance leases to finance computer and networking equipment, and operating leases for office facilities. Please see Note 9 to the consolidated financial statements of LiveVox included elsewhere in the Super 8-K for discussion of the contractual obligations under LiveVox’s term facility.

The following table summarizes our significant contractual obligations as of March 31, 2021 (in thousands):