Hello, my name is Don and I will be your conference operator today. At this time, I would like to welcome everyone to the LivePerson first quarter 2010 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator instructions) Thank you. I would now turn the call over to Tim Bixby. Please go ahead.

Thank you very much. Before we begin, I would like to remind listeners that during this conference call, comments that we make regarding LivePerson that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results. These statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The internal projections and beliefs, upon which we base our expectations today, may change over time, and we undertake no obligation to inform you if they do. Results that we report today should not be considered as an indication of future performance. Changes in economic, business, competitive, technological, regulatory, and other factors could cause LivePerson's actual results to differ materially from those expressed or implied by the projections or forward-looking statements made today. For more detailed information about these factors and other risks that may impact our business, please review the reports and documents filed from time to time by LivePerson with the Securities and Exchange Commission. Also, please note that on the call today, we will discuss some non-GAAP financial measures in talking about the company's financial performance. We report our GAAP results as well as provide a reconciliation of these non-GAAP measures to GAAP financial measures in our earnings release. You can obtain a copy of our news release by visiting the Investor Relations section of our Website. And now, I would like to turn the call over to LivePerson's Chief Executive Officer, Robert LoCascio.

Thanks, Tim. Good afternoon everyone and thank you for joining us. On April 7, we reached our 10th anniversary as a publicly traded company on NASDAQ. Historical reference, and if you have not been following our stock for the entire 10 years, our lowest closing price was $0.11 a share back in 2001. And we recently hit our original high [ph] price of $8. The difference is that we went public at $8 in 2000, and had 6 million in annual revenue. In the first quarter of this year we generated $6 million alone. So, let us say, what a difference 10 years makes, right. So, we have had our shares, ups and downs, and ups, and I like to thank everyone who has been part of our journey. And now I would like to for the 40th time speak about the quarter. We had a great quarter with year-over-year revenue increasing 27% from Q1 2009 to 25.3 million. All segments of the business including our mid-market team contributed to top line growth again this quarter. And we believe we will continue to see contributions from all business segments in the coming quarters. EBITDA per share for the quarter was $0.12 in line with our guidance for the quarter of $0.11 to $0.12 per share, and EPS for Q1 was $0.04, slightly above our guidance of $0.02 to $0.03. EBITDA margin for the quarter was 24%, and we generated more than 6 million in EBITDA for the quarter, and have a cash balance as of the end of the first quarter of $51 million, up from $46 million in Q4. Tim will provide more detail on this shortly. Our enterprise group had solid performance again this quarter, and grew 26% as compared to the same quarter of the prior year.…

Thanks, Rob. I will give a little more detail on the financials and operations and then we will take questions at the end of the call. First quarter revenue increased 2% sequentially to $25.3 million, which is a 27% year-over-year growth rate. EBITDA per share for the first quarter was $0.12, compared to $0.11 per share in the first quarter a year ago. This is right in line with our guidance range of $0.11 to $0.12 as Rob mentioned, while first-quarter EPS was $0.04 a share, which exceeded our guidance range of $0.02 to $0.03. Revenue from our business operations for the first quarter was nearly $22 million, which is a 26% increase as compared to a year ago, 2% sequential increase of a pretty stellar fourth quarter. Revenue from consumer operations for the first quarter was $3.5 million, a 37% annual increase. Top line growth within all of the business operations for the quarter was again driven by a combination of new customers and existing customer expansion for renewals. We signed 10 new enterprise clients in the first quarter 2010, which is a good strong start to the year, and as Rob mentioned, our PFP, our pay-for-performance business continued to be a consistent contributor to enterprise revenue hitting about 17% of total enterprise revenue. The program has been very successful as customers are continuing to see impressive ROI numbers. One of our leading telecommunications customers under this program has seen a 400% ROI, which they have spoken about at recent industry events. While ShopNBC has realized a nearly 300% ROI on their deployment. Both customers are very pleased with their partnership with LivePerson, and both have spoken as I mentioned at recent events supporting their internal ROI. In terms of our overall deal break down within the enterprise, we…

(Operator instructions) Your first question comes from the line of Richard Fetyko with Merriman Curhan Ford & Co. Richard Fetyko - Merriman Curhan Ford & Co.: Good evening guys.

Hi, Rich.

Hi, Rich. Richard Fetyko - Merriman Curhan Ford & Co.: A couple of questions, could you give us the total number of enterprise deals that you could get to the bookings on a consistent basis?

Yes, the total number for the quarter was 55, and that compared to I think was 56 for the prior quarter, so, right in line in Q4. Other than the last Q4 that the strongest number we have seen of any quarter in the past two or three years. Richard Fetyko - Merriman Curhan Ford & Co.: All right. And with respect to the second quarter, the EBITDA guidance you have given seems like you were guiding for sequentially slight decline in EBITDA or am I doing the math incorrectly. And if you're guiding for slight decline in EBITDA just curious why?

Yes, it is -- there is two things happening there. In absolute terms it is a slight decline. It is a little exacerbated by a higher share count than previously expected. This is in line both with our plan and what we have seen in prior years. Our second quarter EBITDA tends to be the narrowest of the year. And that is driven by a couple of things that are consistent year-to-year. The sequential growth tends to be a fair bit stronger in the second half of the year as compared to the first half. And we also historically have analyzed salaries in competition across the company, which represents a pretty significant proportion of our expenses, which are salaries, and that takes effect in the beginning of the second quarter. And that coupled with our investment plan gives us the tightest range between revenue and EBITDA for the quarter. So that is in line with what we would expect to see. Then our guidance and our expectation is that that would expand over the course of the rest of the year. Richard Fetyko - Merriman Curhan Ford & Co.: Got you. I mean you added about 48 people in the quarter?

That is right. Richard Fetyko - Merriman Curhan Ford & Co.: Now, how do you expect the pace of hiring to continue during the rest of the year relative to the first quarter?

It is quite frontloaded and again last year, we were very conservative on hiring, and went 10 or 11 months, and keep the headcount essentially flat. But in prior years where we have been in growth mode, the first half of the year is when you want to get folks in, so you can see benefit during the course of that year. So the pace will continue at a fairly aggressive pace in the second quarter, and we would hope to have not all of the hiring done, but a good proportion of the year’s hiring done by early in the third quarter. We would expect to end the year based on our current plan at right around 500 in terms of overall for company headcount at year end. Richard Fetyko - Merriman Curhan Ford & Co.: I see. And then is the stronger US dollar playing any role in terms of -- what role does it play I guess in terms of your guidance for the second quarter?

We have seen little currency impacts in the last several quarters. We have a significant amount of our cost structure, about a third in the Israeli shekel. Those rates have been fairly steady. There has been a little bit of fluctuation, but right now we don't see -- we also can't predict future rates, but we haven't seen a major negative or positive impact due to currency. Our revenue line is primarily dollars, and so it is really only a cost impact for us. Richard Fetyko - Merriman Curhan Ford & Co.: Okay. Thanks. Now that I have gotten some of the housekeeping questions out of the way, just one sort of strategic, just curious with the opening of the platform what verticals or types of applications do you foresee having the most interest in extending your platform?

Right now, there is -- you know, the low hanging fruit applications are where people, companies can take our chat application, and extend it out beyond the website. So, that is where the first ones will come like mobile. We have developed a way to integrate chat into a twitter feed. So, if you are a customer and someone twitting about you and saying something negative or positive, you can set keywords. We can drop a chat or real-time chat into the middle of that as a retweet [ph]. So, social networking, mobile, also the low hanging fruit and then things with content and data would be sort of the next play analyzing the chat transcripts and all the behavioral data we collect, and so there are some things that, but basically I would say mobile and social is the start. Richard Fetyko - Merriman Curhan Ford & Co.: All right. Thanks guys.

Your next question comes from the line of Brad Whitt with Broadpoint Capital.

Hi guys. Thanks for taking my questions, and (inaudible).

Thanks.

Nice uptick in that deferred revenue, Tim is there anything different you are doing from a billing perspective there, is it just mostly set up fees or?

No, that is primarily a first-quarter phenomenon. We had a little bit greater proportion of annual deals that are tied to the calendar and hit in the first quarter. So there is no major changes in how we are operating billing, but that is a phenomenon we have seen in prior years in the first quarter.

Okay. So, are you primarily able to collect money upfront? I know for your SMBs it is pretty much month to month, all right?

Yes, the number is relatively small and so shifts in it maybe appear outsized, but the vast majority of our customers do pay each month as we bill for the searches that we provide in services.

So, very few pay for you upfront?

That is right.

Okay. That is then okay [ph]?

Correct.

And then the -- I guess, Rob, you had talked about opening the platform for new apps, are there any apps that you are building internally that you are expecting to impact this fiscal year or next fiscal year?

We built apps for iPhone, Blackberry SMS gateway instant messengers. So, we actually did -- we have lab group that did the internal development of that. And we developed this twitter integration, where we can pop a chat into a twitter. So what we're really looking at in the first set of apps is to drive usage of our chat. So a lot of our customers take even our telco customers, a lot of their customers are on an iPhone, and they are having an issue, and when they hit call and they go right to a phone call. So, we want them to do is hit chat with me, and go into chat and drive more volumes. So we didn't put anything obviously in the numbers about any of this, but we should see some volume increase in chats, which usually drives revenue.

Okay. That is helpful, and Tim it looks like to me if my calculation is correct, kind of the implied bookings here, it looks like it was pretty consistent with the fourth quarter?

Little bit ahead of the fourth quarter, and almost as strong as the third quarter, which was our strongest quarter on record. So, just strike math it is about 4 million versus 3.8 in Q4. And remember that bookings number on a relative basis is directionally correct, but does not capture any of the ongoing activity in PFP or small business, but from a metric standpoint that is correct.

Okay, and then final question on PFP at 17% of the enterprise business, based on your pipeline and may be customers you signed recently, where did you see that going maybe by year-end…?

It is kind of holding pace with the B2B growth or the enterprise growth, which is quite strong now. So it really outpaced the enterprise growth, and we had a couple of slower growth quarters last year in a tougher macro environment. Now, it seems to be more in line. So I think by year-end it will probably be right around that same level. If I am wrong on that, it would be stronger. The bias is definitely positive in that group. So it could be a little higher, the net 17%, but I would expect it right in that range.

Okay. That is helpful. Thanks for taking my questions, and thanks for getting the press released out so early this time. That is helpful.

You bet. Sense of humor today [ph].

Your next question comes from the line of Mike Latimore with Northland Capital.

Hi, good evening. Nice quarter. Tim, or you both, maybe you gave us some color already, but were you able to break out enterprise versus midmarket versus SMB revenue?

We didn't break that down, and we are considering what we want to do with that over the course of this year and right now we're going to stick with the breakdowns provided historically. You know that group is getting up and running, but there is some business that is still transitioning between those groups. So, we want to give you sort of color on how they are doing and ramping up. There are three reps. They are doing well and they are growing. But we're going to hold off for one or two more quarters before we introduce new metrics on that group.

Perfect. And on the bookings number being a little ahead of fourth quarter, if you go back, you know, sort of on average the last few years, is the first quarter tending to be a little seasonally weaker than fourth quarter booking traditionally?

It varied. If you look at the last two years, last year I think was probably the tougher scenario on just about every count, and so the first quarter was weaker than the others by a factor, by a factor of 3 I think versus the best quarter. You know, more normalized year if you go back to 2008, it was a little more in balance. So this quarter versus 2008, we are up about 30% versus the first quarter. So what that implies for the rest of the year, I will sort of believe up to you, but it was, I think we were pleased to see it come in line with what we thought was a really strong fourth quarter. So I think that is one of the reasons we were comfortable enough to increase the overall revenue guidance for the year by a little bit.

Right. And then just in terms of some of the verticals, I know you had won a couple of big box retailers in the third quarter, can you talk a little bit more about that vertical, did you still see strong prospects there?

Yes, the pipeline has a number of those guys. They are the big gorillas, and each of our reps has one or two of that sized customer and they are in their sites. They are a little tougher to knock out as we don't see them every quarter. But with the results we see with the big guys we have signed so far, and Home Depot has always been a really strong customer for us, and we would hope to be able to sign some more of those over the course of this year.

Okay. Just last question, you talked about where the expense growth was in the quarter, but it looks like G&A was up the most in terms of just I guess absolute percent, what was going on in the G&A expense line?

In -- as compared to a year ago or compared to…

The fourth quarter.

The bulk of the activity there is a little bit of expanded hiring just to support the overall growth of the company. And then some just sort of general overhead expenses. I don't think there was any one thing that really jumped out in that area.

So, no real one-time item in there or anything?

No, I think it is probably a bigger step up that we will see in subsequent quarters. Again a lot of the sort of one-time salary adjustments, I guess would qualify one time per year, and those hit effective in the earlier part of a year.

Okay, great. Thanks.

Your next question comes from the line of Nathan Schneiderman with ROTH Capital Partners.

Hi, Rob and Tim, thanks very much for taking my questions. I wanted to start off with some follow-up questions on bookings, when you talk about a bookings number what is the typical duration of that?

Over deals in the enterprise, we are focused on the enterprise deals. We don't count small business deals because there are quite a few of those that are at smaller revenue points. So, enterprise deals are typically one year deals. Occasionally they can be two or three year commitments, but the bulk of them are one year commitments.

Was there any change in duration if you look at this bookings number of approximately 4 million versus recent quarters like last quarter or it is staying approximately the same?

In terms of the length of the contracts that folks…

Yes, in other words, was it a very healthy bookings number because the duration of the contract extended or is it pretty apples-to-apples when you look at it?

It is definitely apples-to-apples. Its average price is a little bit higher, and the absolute number of deals was obviously quite high at 65, 66.

Okay. And just to clarify on the raised revenue guidance, do you feel that the strong bookings number alone gives you that confidence or are you kind of highly dependent on what you are seeing in the pipeline?

Well, the two biggest drivers of the year are actual results in Q1, because you get 4 quarters of that impact and then bookings in Q2, you get three quarters of that. And so we go from knowing not much about the year in February to knowing quite a bit about the year today. And so it is not -- it is a pattern that we have seen in prior years, you know the combination of the two, but certainly Q1 coming in right in line or at the higher end of our expectations. It takes a lot of the uncertainty out of the year, because it does have a disproportionate impact on the full year.

Okay, great. And Rob, a few questions for you related to the new products, I understand the open platform is going to be available shortly, but when would you expect general availability on some of these other product lines like some of the data and the content products?

Pieces of it will come out in this quarter, and then we will keep more rolling forward. I wouldn't expect anything significant in data until Q4, because there is a bunch of other stuff we could do on the targeting side with that, but you are going to see like the mobile apps and I think it will come right away, when we release the open platform in a couple of weeks, and some of the social networking apps. And then there is an open API. So, developers can just basically create apps on top of it. The first set of developers will be really our customers. So, our customers what we found, why we did this is that because we got over 80,000 customers, they all have such diverse needs, and there is pent-up demand to do all sorts of interesting things will our applications that we normally can't develop for that large group. So we tend to develop for high end or the very large customers. So in this way it frees and we will get a lot more momentum and a lot more usage of the platform. But we will start delivering applications immediately with the release of the open platform.

Got it. And in the past you have talked about applying your proactive technology in some areas outside of chat, what is your sense of the timeframe to deliver solutions in that area?

Q3, we will open up an API for those engines, and so that people can develop applications of those engines, and the behavioral targeting aspects. We will extend it beyond chat and we are going to add the ability to target couponing and landing pages in general marketing campaigns. And so starting in Q3 that API, the APIs that are now around the chat application, getting access to the chat transcripts, and being able to pull some of the data, so you could do data analysis of the traffic on your website.

Okay. And final question for Tim, when you start introducing these new products, the new APIs and the new product areas like data and proactive outside of chat. If there is going to be a difference in that direct applied, and can you just describe how that might work from your track point of view on your product? Thanks very much?

I think what is interesting from a company perspective, is we have such a diverse way in which we have revenue. We got the consumer revenue; we got a cost practice issue, which paid for performance. We have a recurring revenue model. We have professional services. So, we are managing the business that gives us a lot of flexibility, and so I think going forward we will probably see more of the transactional base where we get some sort of cost for acquisition, cost per click, cost per 1000 CTM. And that is sort of where we will move the business. To give a little context, we sent out a really -- it took about a year, and didn't talk too much about it during that time until we could bring something really tangible, but what we have created now is something that I think will be setting a foundation for the next five years of growth. Five years ago we created proactive chat, and we sort of game changed the basic chat market and that took us from 20 million or so, we are 100 million now. And now we have set the next level of technology to go from here to the next set of goals. So I think it is -- I think it really gives a lot of flexibility getting there.

Thanks very much.

Thank you.

Your next question comes from the line of Jeff Van Rhee with Craig Hallum.

Great, thanks. Several questions guys, just maybe you could have attacked the consumer side of the business, certainly through the past year you harvested some higher rates. As you look forward through the remainder of 2010 year, how do you think about growth here? Have we seen all of the benefits from those rate increases that we really need to drive growth units, or how should we think about that?

Yes, well, we have a couple of levers. One is, we can move rates up and we have (inaudible) which will do that. We can obviously drive minutes. So you put the two triggers. We have a billing system coming out that it took about a year and development, and so that is coming out in a few weeks and that is going to give us a lot of flexibility in the consumer group to change pricing. So when you hit the website, let us say you came from a different campaign, we can give you 20% off your first chat. Do you like one-time $10 couponing? It gives us a lot of flexibility. So I think going forward we will see a little bit of -- some more changes in this because we have a lot more flexibility with the billing system.

Are you assuming sort of within apples-to-apples, I know you talked about expanding into some new markets, but within existing markets can you give me a sense of what kind of gross improvement you are thinking about in terms of minutes?

I mean, I don’t -- I will give it when we deliver the results around different minutes. Essentially each vertical, has obviously a different average minute, and a different average when it comes to what our experts are charging. Spirituality is still one part personal advice. So that is where a lot of the (inaudible) fees, but the other ones are different, but I would like to see how they play out as we go forward. Like text support and tutoring we think could be good categories. Where we are today at last year, we just wanted to stabilize the business and get cash flow going. And now we're really retrenching and saying, okay, we want to expand now into other categories. The other part is the billing system was something that our B2B customer wanted in order for them to utilize experts on their side because they wanted to be able to do couponing, and you get the first 10 hours for free, and we will bundle it with a software package. So we're going to have a lot more flexibility going forward.

Okay, and just a couple of other quick ones, Tim, just still unclear in terms of the guidance, certainly you raised the revenue picture but reiterated on the earnings side, if I heard you right were you saying the only variation there is share count. So, essentially when we are get done doing the models here, we are not -- there were no incremental net operating expenses here added, compared to maybe your expectations last quarter?

No, no. I would like to clarify that. So some of the impact is due to share count, but we are giving expectation that our spend rate will be slightly higher. So that it will come from both share count and increased expenses. Our bias here is definitely towards investment and you know we're still early enough in the year, where costs in Q3 and Q4 are quite a ways in the future, whereas revenue we tend to have a better view of the pipeline. So, you would expect to have, or I would expect you to end up with a model that shows a higher expense rate, but that the per share numbers that we expect to see should come right in line with where we were a quarter ago.

And the incremental relative to last quarter regardless of the dollar amount, where is that focused?

Primarily in the non- G&A. So that tends to scale, and most of our hiring focus is in the other three line items, R&D, sales and marketing and hosting. And so that is where I think we want to maintain a little flexibility, because the reality of the market right now is we have a lot of opportunity. We are seeing better and better people in our recruiting efforts, and so we want to be able to take advantage of that, and a strong cash balance as we see the rest of the year play out.

Okay, in the direct headcount, you were looking to grow from 17 in Q3 of ’09 if I recall to 31 in Q3 ’10, so I guess the question is are you still targeting 31 by Q3 of this year?

I would -- we are still targeting that I would say by year-end, where I don't think we are adjusting any plans. It is just a question of when you get great people on board. So, I would say we're still on track to that and we will look at that and see where we are in a quarter.

Okay, and then last one, I will let somebody else hop on; the pay-for-performance has certainly been just a fantastic aspect of the business. And you touched on the ROI, can you talk about as a percent of mix, it has come up dramatically, and understanding no large numbers, but still it seems to be that you are seeing it [ph] to now drop in line with more of the corporate gross average. I mean, what is new in that business. Is there kind of a gap in the pipeline here in terms of new numbers, is it usage, maybe that some of these customers have -- has it some sort of ceiling. Just help me understand that because it has been well above corporate average for a while?

Yes, I don’t think it is so much appears to be dropping. I think it is the rest of the group catching up, and really starting to hit some really nice booking numbers and growth numbers. So, it is more of a good news for the rest of the group is catching up more so than PFP dropping. I think the longer term PFP opportunity is really strong. What happened in every quarter going forward is a little tougher to predict because it is really driven by when and how we deploy, and where you see improvements happening. So we do not want to give any indication that we don't see you know continuing strength in that business as strong as we have ever seen it, since we started it two years ago.

Okay, great. Thank you.

You have a question from the line of Craig Nankervis with First Analysis. Craig Nankervis – First Analysis: Yes, thanks very much. Nice job, interesting commentary on the R&D side. A couple of questions that I think haven't been asked, one, Rob I'm interested to know you talked about the larger ASPs [ph] in large enterprise deals. Maybe it is deals you have closed or that is deals that are in the pipeline. Can you just elaborate on that a little bit what might be in particular driving the larger ASPs?

It was more of the enterprise team now that used to. As of last quarter, they would go after very high-end customers, and then I call it lower end customers, guys you were spending between 60 and 100 grand a year. And what they have done now, we have taken the 60 and 100 grand and we use that to the midmarket group. And that is focused on that. So what you are going to see from them is we are not including the midmarket, you know, those deals into their pipelines, into their goals. So, they are naturally just going to have a higher ASP for those customers, the remaining customers. And now they have -- the way the team is structured is that each rep has a name account, and so they are very targeted, very high-end. They are doing a tremendous amount of marketing behind those named accounts. So we can penetrate into user brand named companies. So that sort of implies you will see a higher ASPs, not that the ASPs are growing per se. Craig Nankervis – First Analysis: It is more a mathematical thing.

It is mathematical thing. So if you saw, hey, there is only 10 deals in enterprise and normally there is more than that. It is because we shifted some of the deal flow into the midmarket, and I want to make it clear about that. Craig Nankervis – First Analysis: Thank you. And just on the revenue guidance that has been changed, do I understand there is no new product revenue in the guidance, can you just clarify that please?

Yes, there is no new revenue in the guidance. So it is just the existing business. We are seeing it move to the next level of growth. Craig Nankervis – First Analysis: And Tim, there was a question on G&A, do we consider Q1 G&A to be a new baseline for the rest of the year, is that appropriate to think about it that way?

Yes, I'm glad you give me the chance to correct my earlier response. I was combining to questions about the first quarter and the second quarter. The second quarter expense expectation is getting a little bit larger. That is really driven by the compensation adjustments that I mentioned happened annually in the second quarter. First quarter, we spent a little more aggressively in some of our efforts to bring folks in the company together around launching our core value. And so we had a little bit of higher expense rate in Q1, some of which hit the G&A line and that is something that is not something we expect to recur. So it could be a baseline, but that growth from Q4 to Q1 is more of a one-time increase in expenses. Craig Nankervis – First Analysis: So, it is more or less a baseline is the short answer.

Yes, I wouldn't expect significant declines, but the growth rate in Q1 was a bit of an anomaly. Craig Nankervis – First Analysis: Okay. Those are my questions. I think I'm all set. Thank you.

Thank you.

There are no further questions in queue, sir.

Okay, thank you for being on the Q1 2010 call. And we'll see you in Q2.

Thank you for participating in today's conference call. You may disconnect at this time.