10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________.

Commission File Number: 000-30141

LIVEPERSON, INC.

(Exact name of registrant as specified in its charter)

Delaware	13-3861628
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
530 7th Ave, Floor M1
New York, New York	10018
(Address of principal executive offices)	(Zip Code)

(212) 609-4200

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

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

On November 3, 2022, 75,328,068 shares of the registrant’s common stock were outstanding.

1

LIVEPERSON, INC.

September 30, 2022

FORM 10-Q

INDEX

		PAGE
	PART I. Financial Information	4
Item 1.	Financial Statements (Unaudited):	4
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021	5
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021	6
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021	7
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	9
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	57
Item 4.	Controls and Procedures	59
	PART II. Other Information	59
Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61
Signatures		62

2

FORWARD-LOOKING STATEMENTS

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

3

Part I. Financial Information

Item 1. Financial Statements

LIVEPERSON, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	September 30, 2022		December 31, 2021
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	393,330	$	521,846
Accounts receivable, net of allowances of $8,511 and $6,338 as of September 30, 2022 and December 31, 2021, respectively	100,741		93,804
Prepaid expenses and other current assets	31,919		20,626
Total current assets	525,990		636,276
Operating lease right of use assets (Note 10)	2,270		1,977
Property and equipment, net (Note 6)	135,830		124,726
Contract acquisition costs	39,903		40,675
Intangibles, net (Note 5)	81,457		85,554
Goodwill (Note 5)	300,578		291,215
Deferred tax assets	4,570		5,034
Investment in joint venture	3,993		—
Other assets	2,487		1,199
Total assets	$	1,097,078	$	1,186,656
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	11,975	$	16,942
Accrued expenses and other current liabilities (Note 7)	118,421		104,297
Deferred revenue (Note 2)	103,219		98,808
Operating lease liability (Note 10)	3,221		3,380
Total current liabilities	236,836		223,427
Deferred revenue, net of current portion (Note 2)	287		54
Convertible senior notes, net (Note 8)	736,475		574,238
Operating lease liability, net of current portion (Note 10)	698		2,733
Deferred tax liability	2,355		2,049
Other liabilities	30,916		34,718
Total liabilities	1,007,567		837,219
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.001 par value - 5,000,000 shares authorized, none issued	—		—
Common stock, $0.001 par value - 200,000,000 shares authorized, 77,934,440 and 74,980,546 shares issued, 75,188,197 and 72,234,303 shares outstanding as of September 30, 2022 and December 31, 2021, respectively	78		75
Additional paid-in capital	757,162		871,788
Treasury stock - 2,746,243 shares	(3)		(3)
Accumulated deficit	(650,638)		(516,859)
Accumulated other comprehensive loss	(17,088)		(5,564)
Total stockholders’ equity	89,511		349,437
Total liabilities and stockholders’ equity	$	1,097,078	$	1,186,656

         See accompanying notes to unaudited condensed consolidated financial statements.

4

LIVEPERSON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

    

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands, except share and per share amounts)
Revenue	$	129,561	$	118,327	$	392,323	$	345,823
Costs and expenses: (1) (2)
Cost of revenue (3)	43,681		38,795		138,297		112,377
Sales and marketing	49,448		40,852		167,563		116,427
General and administrative	32,171		17,193		92,152		47,784
Product development	44,744		41,734		156,568		112,715
Restructuring costs	7,111		44		17,949		3,269
Amortization of purchased intangibles	920		488		2,742		1,237
Total costs and expenses	178,075		139,106		575,271		393,809
Loss from operations	(48,514)		(20,779)		(182,948)		(47,986)
Other income (expense), net:
Interest income (expense), net	401		(9,442)		(1,713)		(27,852)
Other income (expense), net	5,114		(48)		1,908		3,002
Total other income (expense), net	5,515		(9,490)		195		(24,850)
Loss before provision for income taxes	(42,999)		(30,269)		(182,753)		(72,836)
Provision for income taxes	249		2,538		1,270		2,285
Net loss	$	(43,248)	$	(32,807)	$	(184,023)	$	(75,121)
Net loss per share of common stock:
Basic	$	(0.56)	$	(0.47)	$	(2.39)	$	(1.09)
Diluted	$	(0.56)	$	(0.47)	$	(2.39)	$	(1.09)
Weighted-average shares used to compute net loss per share:
Basic	77,784,346		69,798,839		76,969,629		68,926,203
Diluted	77,784,346		69,798,839		76,969,629		68,926,203
(1) Amounts include stock-based compensation expense, as follows:
Cost of revenue	$	2,905	$	1,337	$	9,156	$	4,618
Sales and marketing	6,021		4,228		18,612		11,383
General and administrative	12,034		4,103		35,703		9,863
Product development	10,980		8,601		36,852		22,103
(2) Amounts include depreciation expense, as follows:
Cost of revenue	$	2,402	$	2,552	$	7,398	$	7,720
Sales and marketing	637		602		1,794		1,820
General and administrative	109		15		342		103
Product development	3,915		3,724		11,880		10,828
(3) Amounts include amortization of purchased intangibles and finance leases, as follows:
Cost of revenue	$	4,811	$	1,343	$	13,788	$	3,702

See accompanying notes to unaudited condensed consolidated financial statements.

5

LIVEPERSON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Net loss	$	(43,248)	$	(32,807)	$	(184,023)	$	(75,121)
Foreign currency translation adjustment	(5,026)		(3,056)		(11,524)		(4,237)
Comprehensive loss	$	(48,274)	$	(35,863)	$	(195,547)	$	(79,358)

See accompanying notes to unaudited condensed consolidated financial statements.

6

LIVEPERSON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Equity
	Shares	Amount		Shares	Amount
	(In thousands, except share data)
Balance as of December 31, 2021	74,980,546	$	75	(2,746,243)	$	(3)	$	871,788	$	(516,859)	$	(5,564)	$	349,437
Cumulative adjustment due to adoption of ASU 2020-06	—	—		—	—		(209,651)		50,244		—		(159,407)
Common stock issued upon exercise of stock options	40,483	—		—	—		506		—		—		506
Common stock issued upon vesting of restricted stock units (“RSUs”)	444,043	—		—	—		—		—		—		—
Stock-based compensation	—	—		—	—		20,522		—		—		20,522
Cash awards settled in shares of the Company’s common stock	735,519	1		—	—		17,298		—		—		17,299
Common stock issued under Employee Stock Purchase Plan	82,100	—		—	—		1,415		—		—		1,415
Issuance of common stock in connection with acquisitions	779,946	1		—	—		17,636		—		—		17,637
Net loss	—	—		—	—		—		(65,364)		—		(65,364)
Other comprehensive loss	—	—		—	—		—		—		(1,699)		(1,699)
Balance as of March 31, 2022	77,062,637	$	77	(2,746,243)	$	(3)	$	719,514	$	(531,979)	$	(7,263)	$	180,346
Common stock issued upon exercise of stock options	25,295	—		—	—		389		—		—		389
Common stock issued upon vesting of RSUs	372,500	1		—	—		—		—		—		1
Stock-based compensation	—	—		—	—		18,826		—		—		18,826
Common stock issued under Employee Stock Purchase Plan	99,495	—		—	—		1,403		—		—		1,403
Net loss	—	—		—	—		—		(75,411)		—		(75,411)
Other comprehensive loss	—	—		—	—		—		—		(4,799)		(4,799)
Balance as of June 30, 2022	77,559,927	$	78	(2,746,243)	$	(3)	$	740,132	$	(607,390)	$	(12,062)	$	120,755
Common stock issued upon exercise of stock options	134,423	—		—	—		343		—		—		343
Common stock issued upon vesting of RSUs	161,272	—		—	—		—		—		—		—
Stock-based compensation	—	—		—	—		15,843		—		—		15,843
Common stock issued under Employee Stock Purchase Plan	78,818	—		—	—		844		—		—		844
Net loss	—	—		—	—		—		(43,248)		—		(43,248)
Other comprehensive loss	—	—		—	—		—		—		(5,026)		(5,026)
Balance as of September 30, 2022	77,934,440	$	78	(2,746,243)	$	(3)	$	757,162	$	(650,638)	$	(17,088)	$	89,511

See accompanying notes to unaudited condensed consolidated financial statements.

7

	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Equity
	Shares	Amount		Shares	Amount
	(In thousands, except share data)
Balance as of December 31, 2020	70,264,265	$	70	(2,709,830)	$	(3)	$	635,672	$	(391,885)	$	80	$	243,934
Common stock issued upon exercise of stock options	209,185	—		—	—		2,617		—		—		2,617
Common stock issued upon vesting of RSUs	454,508	1		—	—		(1)		—		—		—
Stock-based compensation	—	—		—	—		9,225		—		—		9,225
Cash awards settled in shares of the Company’s common stock	400,700	—		—	—		25,925		—		—		25,925
Common stock issued under Employee Stock Purchase Plan	22,544	—		—	—		1,257		—		—		1,257
Net loss	—	—		—	—		—		(21,195)		—		(21,195)
Other comprehensive loss	—	—		—	—		—		—		(1,746)		(1,746)
Balance as of March 31, 2021	71,351,202	$	71	(2,709,830)	$	(3)	$	674,695	$	(413,080)	$	(1,666)	$	260,017
Common stock issued upon exercise of stock options	252,155	—		—	—		3,999		—		—		3,999
Common stock issued upon vesting of RSUs	252,218	1		—	—		(1)		—		—		—
Stock-based compensation	—	—		—	—		9,524		—		—		9,524
Cash awards settled in shares of the Company’s common stock	137,300	—		—	—		7,578		—		—		7,578
Common stock issued under Employee Stock Purchase Plan	24,270	—		—	—		1,128		—		—		1,128
Net loss	—	—		—	—		—		(21,119)		—		(21,119)
Other comprehensive loss	—	—		—	—		—		—		565		565
Balance as of June 30, 2021	72,017,145	$	72	(2,709,830)	$	(3)	$	696,923	$	(434,199)	$	(1,101)	$	261,692
Common stock issued upon exercise of stock options	191,693	—		—	—		3,036		—		—		3,036
Common stock issued upon vesting of RSUs	142,867	—		—	—		—		—		—		—
Issuance of common stock in connection with acquisitions	351,462	1		—	—		20,012		—		—		20,013
Stock-based compensation	—	—		—	—		12,148		—		—		12,148
Common stock issued under Employee Stock Purchase Plan	19,882	—		—	—		1,083		—		—		1,083
Net loss	—	—		—	—		—		(32,807)		—		(32,807)
Other comprehensive loss	—	—		—	—		—		—		(3,056)		(3,056)
Balance as of September 30, 2021	72,723,049	$	73	(2,709,830)	$	(3)	$	733,202	$	(467,006)	$	(4,157)	$	262,109

See accompanying notes to unaudited condensed consolidated financial statements.

8

LIVEPERSON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)    

	Nine Months Ended
	September 30,
	2022		2021
	(In thousands)
OPERATING ACTIVITIES:
Net loss	$	(184,023)	$	(75,121)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Stock-based compensation expense	100,323		47,967
Depreciation	21,414		20,471
Amortization of purchased intangibles and finance leases	16,530		4,939
Amortization of debt issuance costs	2,831		1,858
Accretion of debt discount on convertible senior notes	—		24,770
Allowance for credit losses	4,669		2,431
Changes in fair value of contingent consideration	(8,568)		—
Gain on settlement of leases	—		(3,483)
Deferred income taxes	770		(1,129)
Changes in operating assets and liabilities:
Accounts receivable	(13,856)		(5,827)
Prepaid expenses and other current assets	(13,519)		(10,269)
Contract acquisition costs noncurrent	(2,842)		(4,765)
Other assets	(123)		741
Accounts payable	(4,229)		(354)
Accrued expenses and other current liabilities	(12,234)		22,176
Deferred revenue	7,450		14,925
Operating lease liabilities	(2,148)		(4,018)
Other liabilities	8,084		330
Net cash (used in) provided by operating activities	(79,471)		35,642
INVESTING ACTIVITIES:
Purchases of property and equipment, including capitalized software	(35,212)		(33,821)
Investment in joint venture	(3,993)		—
Payments for acquisition, net of cash acquired	(3,458)		(23,014)
Repayment of debt acquired in acquisition	—		(1,955)
Payments for intangible assets	(1,394)		(1,931)
Net cash used in investing activities	(44,057)		(60,721)
FINANCING ACTIVITIES:
Principal payments for financing leases	(2,785)		(2,604)
Proceeds from issuance of common stock in connection with the exercise of options and ESPP	1,238		13,127
Payments on conversion of convertible senior notes	—		(2)
Net cash (used in) provided by financing activities	(1,547)		10,521
Effect of foreign exchange rate changes on cash and cash equivalents	(4,713)		(5,072)
Net decrease in cash, cash equivalents, and restricted cash	(129,788)		(19,630)
Cash, cash equivalents, and restricted cash - beginning of year	523,532		654,152
Cash, cash equivalents, and restricted cash - end of period	$	393,744	$	634,522

9

	Nine Months Ended
	September 30,
	2022		2021
	(In thousands)
Reconciliation of cash, cash equivalents, and restricted cash to condensed consolidated balance sheets
Cash and cash equivalents	$	393,330	$	633,042
Restricted cash in prepaid expenses and other current assets	414		1,480
Total cash, cash equivalents, and restricted cash - end of period	$	393,744	$	634,522
Supplemental disclosure of other cash flow information:
Cash paid for income taxes	$	3,079	$	2,219
Cash paid for interest	1,895		1,981
Supplemental disclosure of non-cash investing and financing activities:
Increase in convertible senior notes, net upon adoption of ASU 2020-06 (Note 1)	$	159,407	$	—
Purchase of property and equipment recorded in accounts payable	113		581
Issuance of shares of common stock to settle cash awards	17,298		33,503
Right of use assets obtained in exchange for operating lease liabilities	2,417		1,856
Supplemental disclosure of non-cash financing activities related to the WildHealth acquisition in February 2022 (Note 9):
Issuance of 776,825 shares of common stock	$	17,675	$	—
Fair value of contingent earn-out recorded in connection with WildHealth transaction	38,151		—
Supplemental disclosure of non-cash financing activities related to the e-bot7 acquisition in July 2021:
Issuance of 351,462 shares of common stock	$	—	$	20,012
Fair value of contingent earn-out recorded in connection with e-bot7 transaction	6,113		6,026

See accompanying notes to unaudited condensed consolidated financial statements.

10

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Description of Business and Basis of Presentation

LivePerson, Inc. (“LivePerson”, the “Company”, “we”, “our” or “us”) is a leading Conversational Artificial Intelligence (“AI”) company creating digital experiences that are Curiously Human. Conversational AI allows humans and machines to interact using natural language, including speech or text. During the past decade, consumers have made mobile devices the center of their digital lives, and they have made mobile messaging the center of communication with friends, family and peers. The Company’s technology enables consumers to connect with businesses through these same preferred conversational interfaces, including Facebook Messenger, short message service (“SMS”), WhatsApp, Apple Business Chat, Google Rich Business Messenger and Alexa. These messaging conversations harness human agents, bots and AI to power convenient, personalized and content-rich journeys across the entire consumer lifecycle, from discovery and research, to sales, service and support, and increasingly marketing, social, and brick and mortar engagements. For example, consumers can look up product info like ratings, images and pricing, search for stores, see product inventory, schedule appointments, apply for credit, approve repairs, and make purchases or payments - all without ever leaving the messaging channel. These AI and human-assisted conversational experiences constitute the Conversational Space, within which LivePerson has strategically developed one of the industry’s largest ecosystems of messaging endpoints and use cases.

The Conversational Cloud, the Company’s enterprise-class cloud-based platform, enables businesses to become conversational by securely deploying AI-powered messaging at scale for brands with tens of millions of customers and many thousands of agents. The Conversational Cloud powers conversations across each of a brand’s primary digital channels, including mobile apps, mobile and desktop web browsers, SMS, social media and third-party consumer messaging platforms. Brands can also use the Conversational Cloud to message consumers when they dial a 1-800 number instead of forcing them to navigate interactive voice response systems (“IVRs”) and wait on hold. Similarly, the Conversational Cloud can ingest traditional emails and convert them into messaging conversations, or embed messaging conversations directly into web advertisements, rather than redirect consumers to static website landing pages. Agents can manage all conversations with consumers through a single console interface, regardless of where the conversations originated.

LivePerson’s robust, cloud-based suite of rich messaging, real-time chat, AI and automation offerings features consumer and agent facing bots, intelligent routing and capacity mapping, real-time intent detection and analysis, queue prioritization, customer sentiment, analytics and reporting, content delivery, Payment Card Industry (“PCI”) compliance, co-browsing and a sophisticated proactive targeting engine. An extensible application programming interface (“API”) stack facilitates a lower cost of ownership by facilitating robust integration into back-end systems, as well as enabling developers to build their own programs and services on top of the platform. More than 40 APIs and software development kits are available on the Conversational Cloud.

LivePerson’s Conversational AI offerings put the power of bot development, training, management and analysis into the hands of the contact center and its agents, the teams most familiar with how to structure sales and service conversations to drive successful outcomes. The platform enables what the Company calls “the tango” of humans, AI and bots, whereby human agents act as bot managers, overseeing AI-powered conversations and seamlessly stepping into the flow when a personal touch is needed. Agents become ultra-efficient, leveraging the AI engine to serve up relevant content, define next-best actions and take over repetitive transactional work, so that the agent can focus on relationship building. By seamlessly integrating messaging with the Company’s proprietary Conversational AI, as well as third-party bots, the Conversational Cloud offers brands a comprehensive approach to scaling automations across their millions of customer conversations.

LivePerson’s consumer services offering is an online marketplace that connects independent service providers (“Experts”) who provide information and knowledge for a fee via mobile and online messaging with individual consumers (“Users”). Users seek assistance and advice in various categories including personal counseling and coaching, computers and programming, education and tutoring, spirituality and religion, and other topics.

LivePerson was incorporated in the State of Delaware in November 1995 and the LivePerson service was introduced in November 1998. The Company completed an initial public offering in April 2000 and is currently traded on the Nasdaq Global Select Market (“Nasdaq”) and the Tel Aviv Stock Exchange (“TASE”). LivePerson is headquartered in New York City. LivePerson has adopted an “employee-centric” workforce model that does not rely on traditional offices. During the second quarter of 2021, the Company decided to reoccupy some of its leased space to provide its employees with the option of working in an office space environment if they choose to do so.

11

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Basis of Presentation

The accompanying condensed consolidated financial statements, and the financial data and other information disclosed in the notes to the condensed consolidated financial statements as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021 are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for a fair presentation of the Company’s condensed consolidated financial position, results of operations, comprehensive loss, and cash flows for the interim periods presented. The results of operations for any interim period are not necessarily indicative of the results of operations for any other future interim period or for a full fiscal year. The condensed consolidated balance sheet as of December 31, 2021 has been derived from audited consolidated financial statements at that date.

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

Principles of Consolidation

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

Equity Method Investment

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

Variable Interest Entities

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

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

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

12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company periodically reassesses whether it is the primary beneficiary of a VIE. See Note 18 – Variable Interest Entities for the Company’s assessment of VIEs.

Use of Estimates

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

Significant items subject to such estimates and assumptions include:

•revenue recognition;

•stock-based compensation;

•accounts receivable;

•valuation of goodwill;

•valuation of intangible assets;

•income taxes; and

•legal contingencies.

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

Goodwill

The Company evaluates goodwill for impairment on an annual basis in the third quarter, and more frequently whenever events or substantive changes in circumstances indicate that it is more likely than not that the carrying value of reporting unit exceeds its fair value in accordance with ASC 820, “Fair Value Measurement.” In performing the goodwill impairment test, the Company first assesses qualitative factors to determine the existence of impairment. If the qualitative factors indicate that the carrying value of a reporting unit more likely than not exceeds its fair value, the Company proceeds to a quantitative test to measure the existence and amount, if any, of goodwill impairment. The Company may also choose to bypass the qualitative assessment and proceed directly to the quantitative test.

In performing the quantitative test, impairment loss is recorded to the extent that the carrying value of the reporting unit exceeds its assessed fair value. The Company determines the fair value using the income and market approaches.

Under the income approach, the fair value of a reporting unit is the present value of its future cash flows as viewed from the eyes of a hypothetical market participant in an orderly transaction. These future cash flows are derived from expectations of revenue, expenses, tax deductions and credits, working capital flows, capital expenditures, and other projected sources and uses of cash, as applicable. Value indications are developed by discounting expected cash flows to their present value using a discount rate commensurate with the risks associated with the reporting unit subject to testing.

Under the market approach, the Company uses market multiples derived from comparable companies based on measures salient to investors in those companies.

Foreign Currency Translation

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

13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

exchange transaction gain or losses are included in other income (expense), net in the accompanying condensed consolidated statements of operations.

Recently Issued Accounting Pronouncements

Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions: In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03 to clarify that a contractual restriction on the sale of an equity security is not considered part of a unit of account of the equity security, and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments also require the following disclosures for equity securities subject to the contractual sale restrictions:

1.The fair value of equity securities subject to the contractual sale restrictions reflected on the balance sheet.

2.The nature and remaining duration of the restriction(s).

3.The circumstances that could cause a lapse in the restriction(s).

This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those financial years. The Company does not expect the adoption of ASU 2022-03 to have a significant impact on its condensed consolidated financial statements.

Recently Adopted Accounting Pronouncements

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

•removing certain conditions required to meet the settlement criterion;

•clarifying that instruments that are not indexed to the issuer’s own stock must be remeasured at fair value through earnings at each reporting period; and

•clarifying the scope of reassessment guidance and disclosure requirements in Subtopic 815-40.

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

For SEC filers, excluding smaller reporting companies, the ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The ASU specifies that the guidance should be adopted as of the beginning of the annual fiscal year. In connection with the adoption of ASU 2020-06, the Company recognized a $50.2 million decrease to accumulated deficit, a $209.7 million decrease to additional paid-in capital, and a $159.4 million increase to convertible senior notes, net. See Note 8 – Convertible Senior Notes, Net and Capped Call Transactions for a description of the convertible senior notes, net on the condensed consolidated balance sheet.

With the exception of the new standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the quarter ended September 30, 2022, that are of significance or potential significance to the Company.

Note 2. Revenue Recognition 

The majority of the Company’s revenue is generated from monthly service revenues, which is inclusive of its platform usage pricing model, and related professional services from the sale of its services. Revenues are recognized when control of these services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those services. No single customer accounted for 10% or more of the Company’s total revenue for the three and nine months ended September 30, 2022 and 2021.

14

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Remaining Performance Obligation

As of September 30, 2022, the aggregate amount of the total transaction price allocated in contracts with original duration of one year or greater to the remaining performance obligations was $430.5 million. Approximately 88% of the Company’s remaining performance obligations is expected to be recognized during the next 24 months, with the balance recognized thereafter. The aggregate balance of unsatisfied performance obligations represents contracted revenue that has not yet been recognized, and does not include contract amounts that are cancellable by the customer, amounts associated with optional renewal periods, and any amounts related to performance obligations, which are billed and recognized as they are delivered.

Deferred Revenues

The Company records deferred revenues when cash payments are received or due in advance of its performance. The increase in the deferred revenue balance as of September 30, 2022 is primarily driven by cash payments received or due in advance of its performance obligations, partially offset by $67.2 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2021.

The following table presents deferred revenue by revenue source:

	Deferred Revenue
	September 30, 2022		December 31, 2021
	(In thousands)
Hosted services – Business	$	101,113	$	94,107
Hosted services – Consumer	795		870
Professional services – Business	1,311		3,831
Total deferred revenue - short term	$	103,219	$	98,808
Hosted services – Business	171		—
Professional services – Business	$	116	$	54
Total deferred revenue - long term	$	287	$	54

    

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue source:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Revenue:
Hosted services – Business	$	89,491	$	93,234	$	290,671	$	271,966
Hosted services – Consumer	9,460		9,123		27,711		27,944
Professional services – Business	30,610		15,970		73,941		45,913
Total revenue	$	129,561	$	118,327	$	392,323	$	345,823

Revenue by Geographic Location

The following table presents the Company’s revenues attributable to domestic and foreign operations for the periods presented:

15

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
United States	$	89,619	$	80,096	$	267,189	$	229,802
Other Americas (1)	2,470		4,009		10,484		11,917
Total Americas	92,089		84,105		277,673		241,719
EMEA (2) (4)	16,107		23,399		57,890		68,092
APAC (3)	21,365		10,823		56,760		36,012
Total revenue	$	129,561	$	118,327	$	392,323	$	345,823

—————————————

(1)Canada, Latin America and South America

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

(3)Asia-Pacific (“APAC”)

(4)Includes revenues from the United Kingdom of $13.1 million and $14.3 million for the three months ended September 30, 2022 and 2021, respectively, and from the Netherlands of $1.3 million and $1.2 million for the three months ended September 30, 2022 and 2021, respectively. Includes revenues from the United Kingdom of $41.6 million and $42.4 million for the nine months ended September 30, 2022 and 2021, respectively, and from the Netherlands of $4.8 million and $3.7 million for the nine months ended September 30, 2022 and 2021, respectively.

Information about Contract Balances

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

In some arrangements, the Company allows customers to pay for access to the Conversational Cloud over the term of the software license. The Company refers to these as subscription transactions. Amounts recognized as revenue in excess of amounts billed are recorded as unbilled receivables. Unbilled receivables, anticipated to be invoiced in the next twelve months, are included in accounts receivable on the condensed consolidated balance sheet. Contract acquisition costs represent prepaid sales commissions. The opening and closing balances of the Company’s accounts receivable, unbilled receivables, contract acquisition costs, and deferred revenues are as follows (in thousands):

	Accounts Receivable		Unbilled Receivable		Contract Acquisition Costs (Non-current)		Deferred Revenue (Current)		Deferred Revenue (Non-current)
Opening balance as of December 31, 2021	$	69,259	$	24,545	$	40,675	$	98,808	$	54
Increase (decrease), net	5,863		1,074		(772)		4,411		233
Ending balance as of September 30, 2022	$	75,122	$	25,619	$	39,903	$	103,219	$	287

Accounts Receivable, Net

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience. The Company reviews its allowance for doubtful accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Accounts receivable are written off against the allowance for uncollectible accounts when the Company determines amounts are no longer collectible.

16

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Allowance for Doubtful Accounts
	(In thousands)
Balance as of December 31, 2021	$	6,338
Additions charged to costs and expenses	4,669
Deductions/write-offs	(2,496)
Balance as of September 30, 2022	$	8,511

Note 3. Net Loss Per Share

Basic earnings per share (“EPS”) excludes dilution for common stock equivalents and is computed by dividing net income or loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. All options, warrants, or other potentially dilutive instruments issued for nominal consideration are required to be included in the calculation of basic and diluted net income attributable to common stockholders. Diluted EPS is calculated using the “if-converted” method. The “if-converted” method is only assumed in periods where such application would be dilutive. In applying the “if-converted” method for diluted net income per share, the Company would assume conversion of the 2024 Notes at a ratio of 25.9182 shares of its common stock per $1,000 principal amount of the 2024 Notes. The Company would assume conversion of the 2026 Notes at a ratio of 13.2933 shares of its common stock per $1,000 principal amount of the 2026 Notes. Assumed converted shares of the Company’s common stock are weighted for the period the 2024 Notes and 2026 Notes were outstanding. The shares of common stock underlying the conversion option of the 2024 Notes and 2026 Notes were not included in the calculation of diluted income per share for the three and nine months ended September 30, 2022 and 2021.

See Note 8 – Convertible Senior Notes, Net and Capped Call Transactions for a description of the 2024 Notes and 2026 Notes.

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net loss (in thousands)	$	(43,248)	$	(32,807)	$	(184,023)	$	(75,121)
Weighted average number of shares outstanding, basic and diluted	77,784,346		69,798,839		76,969,629		68,926,203
Net loss per share, basic and diluted	$	(0.56)	$	(0.47)	$	(2.39)	$	(1.09)

The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows:

	As of September 30,
	2022	2021
Shares subject to outstanding common stock options and employee stock purchase plan	4,514,229	4,291,829
Restricted stock units	5,246,300	3,063,156
Fair value of earn-outs	11,996,072	697,133
Conversion option of the 2024 Notes	5,961,186	5,961,186
Conversion option of the 2026 Notes	6,879,283	6,879,283
Total	34,597,070	20,892,587

Note 4. Segment Information

The Company is organized into two operating segments for purposes of making operating decisions and assessing performance. The Business segment enables brands to leverage the Conversational Cloud’s sophisticated intelligence engine to connect with consumers through an integrated suite of mobile and online business messaging technologies. The Consumer segment facilitates online transactions between Experts and Users seeking information and knowledge for a fee via mobile and online messaging. Both segments currently generate their revenue primarily in the United States. The chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, evaluates performance, makes operating decisions, and allocates resources based on the operating income (loss) of each segment. The reporting segments follow the same accounting

17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

polices used in the preparation of the Company’s condensed consolidated financial statements which are described in Note 1 – Description of Business and Basis of Presentation. The Company allocates cost of revenue, sales and marketing, and amortization of purchased intangibles to the segments, but it does not allocate product development expenses, general and administrative expenses, restructuring costs, or income tax expense because management does not use this information to measure performance of the operating segments. There are currently no inter-segment sales.

Summarized financial information by segment for the three months ended September 30, 2022, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	89,491	$	—	$	—	$	89,491
Hosted services – Consumer	—		9,460		—		9,460
Professional services – Business	30,610		—		—		30,610
Total revenue	120,101		9,460		—		129,561
Cost of revenue	42,392		1,289		—		43,681
Sales and marketing	42,826		6,622		—		49,448
Amortization of purchased intangibles	920		—		—		920
Unallocated corporate expenses	—		—		84,026		84,026
Operating income (loss)	$	33,963	$	1,549	$	(84,026)	$	(48,514)

Summarized financial information by segment for the three months ended September 30, 2021, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	93,234	$	—	$	—	$	93,234
Hosted services – Consumer	—		9,123		—		9,123
Professional services – Business	15,970		—		—		15,970
Total revenue	109,204		9,123		—		118,327
Cost of revenue	37,057		1,738		—		38,795
Sales and marketing	34,640		6,212		—		40,852
Amortization of purchased intangibles	488		—		—		488
Unallocated corporate expenses	—		—		58,971		58,971
Operating income (loss)	$	37,019	$	1,173	$	(58,971)	$	(20,779)

18

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Summarized financial information by segment for the nine months ended September 30, 2022, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	290,671	$	—	$	—	$	290,671
Hosted services – Consumer	—		27,711		—		27,711
Professional services – Business	73,941		—		—		73,941
Total revenue	364,612		27,711		—		392,323
Cost of revenue	134,229		4,068		—		138,297
Sales and marketing	148,370		19,193		—		167,563
Amortization of purchased intangibles	2,742		—		—		2,742
Unallocated corporate expenses	—		—		266,669		266,669
Operating income (loss)	$	79,271	$	4,450	$	(266,669)	$	(182,948)

Summarized financial information by segment for the nine months ended September 30, 2021, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	271,966	$	—	$	—	$	271,966
Hosted services – Consumer	—		27,944		—		27,944
Professional services – Business	45,913		—		—		45,913
Total revenue	317,879		27,944		—		345,823
Cost of revenue	106,932		5,445		—		112,377
Sales and marketing	96,758		19,669		—		116,427
Amortization of purchased intangibles	1,237		—		—		1,237
Unallocated corporate expenses	—		—		163,768		163,768
Operating income (loss)	$	112,952	$	2,830	$	(163,768)	$	(47,986)

Geographic Information

The Company is domiciled in the United States and has international operations around the globe. The following table presents the Company’s long-lived assets by geographic region as of the dates presented:

	September 30, 2022		December 31, 2021
	(In thousands)
United States	$	476,244	$	444,318
Germany	42,927		52,342
Israel	23,161		20,754
Australia	12,031		12,771
Netherlands	3,320		4,566
Other (1)	13,405		15,629
Total long-lived assets	$	571,088	$	550,380

——————————————

(1)United Kingdom, Japan, France, Italy, Spain, Canada, and Singapore.

19

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 5. Goodwill and Intangible Assets, Net

Goodwill

The changes in the carrying amount of goodwill for the nine months ended September 30, 2022 are as follows:

	Business		Consumer		Consolidated
	(In thousands)
Balance as of December 31, 2021	$	283,191	$	8,024	$	291,215
Adjustments to goodwill:
Acquisitions	15,511		—		15,511
Foreign exchange adjustment	(6,148)		—		(6,148)
Balance as of September 30, 2022	$	292,554	$	8,024	$	300,578

During the third quarter of 2022, the Company performed a quantitative analysis to determine whether it was more likely than not that goodwill impairment existed as of the annual impairment test date. As a result of this assessment, the Company concluded that the estimated fair values of each reporting unit exceeded their respective carrying values. Therefore, the Company did not record goodwill impairment for the three and nine months ended September 30, 2022. The Company also did not record goodwill impairment for the three and nine months ended September 30, 2021.

Intangible Assets, Net

Intangible assets, net, are summarized as follows:

	As of September 30, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Amortization Period
	(In thousands)
Amortizing intangible assets:
Technology	$	97,143	$	(41,938)	$	55,205	5.0 years
Customer relationships	31,795		(16,795)		15,000		10.0 years
Patents	10,234		(1,332)		8,902		12.8 years
Trademarks	1,275		(312)		963		5.0 years
Trade names	1,040		(273)		767		2.8 years
Other	914		(294)		620		4.1 years
Total intangible assets	$	142,401	$	(60,944)	$	81,457

    

20

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Amortization Period
	(In thousands)
Amortizing intangible assets:
Technology	$	90,626	$	(30,757)	$	59,869	5.1 years
Customer relationships	32,162		(15,164)		16,998		10.0 years
Patents	7,988		(1,137)		6,851		11.8 years
Trademarks	1,474		(135)		1,339		5.0 years
Trade names	460		(43)		417		2.1 years
Other	314		(234)		80		2.2 years
Total intangible assets	$	133,024	$	(47,470)	$	85,554

 

Amortization expense is calculated over the estimated useful life of the asset. A portion of this amortization is included in cost of revenue. Aggregate amortization expense for intangible assets, net was $4.8 million and $0.9 million for the three months ended September 30, 2022 and 2021, respectively, and $13.8 million and $2.2 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, estimated annual amortization expense for the next five years and thereafter is as follows:

	Estimated Amortization Expense
	(In thousands)
Remainder of fiscal 2022	$	4,626
2023	17,753
2024	15,965
2025	15,567
2026	12,901
Thereafter	14,645
Total	$	81,457

Note 6. Property and Equipment, Net

The following table presents the detail of property and equipment, net for the periods presented:

	September 30, 2022		December 31, 2021
	(In thousands)
Computer equipment and software	$	123,237	$	120,685
Internal-use software development costs	150,831		122,479
Finance lease right of use assets	3,998		6,797
Furniture, equipment, and building improvements	519		258
Property and equipment, at cost	278,585		250,219
Less: accumulated depreciation	(142,755)		(125,493)
Property and equipment, net	$	135,830	$	124,726

21

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 7. Accrued Expenses and Other Current Liabilities

The following table presents the detail of accrued expenses and other current liabilities for the periods presented:

	September 30, 2022		December 31, 2021
	(In thousands)
Professional services and consulting and other vendor fees	$	42,381	$	58,811
Payroll and other employee related costs	22,373		29,855
Short-term contingent earn-out	36,109		—
Sales commissions	2,010		4,269
Finance lease liability	3,412		3,738
Unrecognized tax benefits	2,377		2,424
Restructuring	5,710		1,694
Taxes other than income tax	1,196		918
Other	2,853		2,588
Total accrued expenses and other current liabilities	$	118,421	$	104,297

Note 8. Convertible Senior Notes, Net and Capped Call Transactions

Convertible Senior Notes due 2024 and Capped Calls

In March 2019, the Company issued $230.0 million aggregate principal amount of its 0.750% Convertible Senior Notes due 2024 (the “2024 Notes”) in a private placement, which amount includes $30.0 million aggregate principal amount of such Notes issued pursuant to the exercise in full by the initial purchasers of their option to purchase additional 2024 Notes. Interest on the 2024 Notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2019.

The 2024 Notes will mature on March 1, 2024, unless earlier repurchased or redeemed by the Company or converted pursuant to their terms. The total net proceeds from the offering of the 2024 Notes, after deducting debt issuance costs, paid, or payable by the Company, was approximately $221.4 million.

Each $1,000 in principal amount of the 2024 Notes is initially convertible into 25.9182 shares of the Company’s common stock par value $0.001, which is equivalent to an initial conversion price of approximately $38.58 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its 2024 Notes in connection with such a corporate event. The 2024 Notes are not redeemable prior to the maturity date of the 2024 Notes and no sinking fund is provided for the 2024 Notes. If the Company undergoes a fundamental change (as defined in the indenture governing the 2024 Notes) prior to the maturity date, holders may require the Company to repurchase for cash all or any portion of their 2024 Notes in principal amounts of $1,000 or a multiple thereof at a fundamental change repurchase price equal to 100% of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Holders of the 2024 Notes may convert their 2024 Notes at their option at any time prior to the close of business on the business day immediately preceding November 1, 2023, in multiples of $1,000 principal amount, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2019 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2024 Notes on each applicable trading day as determined by the Company; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the indenture governing the 2024 Notes) per $1,000 principal amount of 2024 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the 2024 Notes on each such trading day; or (3) upon the occurrence of specified corporate events. On or after November 1, 2023, holders may convert all or any portion of their 2024 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the

22

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

maturity date, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election.

During the three and nine months ended September 30, 2022, the conditions allowing holders of the 2024 Notes to convert were not met.

The 2024 Notes are senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2024 Notes; equal in right of payment with the Company’s existing and future liabilities that are not so subordinated; effectively subordinated to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company.

Prior to the adoption of ASU 2020-06 on January 1, 2022, the Company separated the 2024 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that did not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $52.9 million and was determined by deducting the fair value of the liability component from the par value of the 2024 Notes. The equity component was not remeasured as long as it continued to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, was amortized to interest expense at an effective interest rate over the contractual term of the 2024 Notes. This accounting treatment no longer applies under ASU 2020-06.

Prior to the adoption of ASU 2020-06 on January 1, 2022, the Company allocated the total amount incurred of approximately $8.6 million to the liability and equity components of the 2024 Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component were approximately $6.6 million, were recorded as an additional debt discount and were amortized to interest expense using the effective interest method over the contractual term of the 2024 Notes. Issuance costs attributable to the equity component were approximately $2.0 million and recorded as a reduction of additional paid in capital in stockholders’ equity. This accounting treatment no longer applies under ASU 2020-06.

In accounting for the 2024 Notes after the adoption of ASU 2020-06, the 2024 Notes are accounted for as a single liability, and the carrying amount of the 2024 Notes is $227.5 million as of September 30, 2022, consisting of principal of $230.0 million, net of unamortized debt issuance costs of $2.5 million. The 2024 Notes were classified as long term liabilities as of September 30, 2022. The remaining term over which the 2024 Notes’ debt issuance costs will be amortized is 1.4 years. The effective interest rate on the debt was 1.53% for the three and nine months ended September 30, 2022.

In connection with the offering of the 2024 Notes, the Company entered into privately-negotiated capped call option transactions with certain counterparties (the “2024 capped calls”). The 2024 capped calls each have an initial strike price of approximately $38.58 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2024 Notes. The 2024 capped calls have initial cap prices of $57.16 per share, subject to certain adjustment events. The 2024 capped calls cover, subject to anti-dilution adjustments, approximately 5.96 million shares of common stock. The 2024 capped calls are generally intended to reduce or offset the potential dilution to the common stock upon any conversion of the 2024 Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The 2024 capped calls expire on March 1, 2024, subject to earlier exercise. The 2024 capped calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. In addition, the 2024 capped calls are subject to certain specified additional disruption events that may give rise to a termination of the 2024 capped calls, including changes in law, failure to deliver, and hedging disruptions. The 2024 capped calls are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost of $23.2 million incurred to purchase the 2024 capped calls was recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheet.

Convertible Senior Notes due 2026 and Capped Calls

In December 2020, the Company issued $517.5 million aggregate principal amount of its 0% Convertible Senior Notes due 2026 (the “2026 Notes” and together with the 2024 Notes, the “Notes”) in a private placement, which amount includes $67.5 million aggregate principal amount of such Notes issued pursuant to the exercise in full by the initial purchasers of their option to purchase additional 2026 Notes.

23

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The 2026 Notes will mature on December 15, 2026, unless earlier repurchased or redeemed by the Company or converted pursuant to their terms. The total net proceeds from the offering of the 2026 Notes, after deducting debt issuance costs, paid or payable by the Company, was approximately $505.3 million.

Each $1,000 in principal amount of the 2026 Notes is initially convertible into 13.2933 shares of the Company’s common stock par value $0.001, which is equivalent to an initial conversion price of approximately $75.23 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its 2026 Notes in connection with such a corporate event. The 2026 Notes are not redeemable prior to the maturity date of the 2026 Notes and no sinking fund is provided for the 2026 Notes. If the Company undergoes a fundamental change (as defined in the indenture governing the 2026 Notes) prior to the maturity date, holders may require the Company to repurchase for cash all or any portion of their 2026 Notes in principal amounts of $1,000 or a multiple thereof at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid special interest to, but excluding, the fundamental change repurchase date.

Holders of the 2026 Notes may convert their 2026 Notes at their option at any time prior to the close of business on the business day immediately preceding August 15, 2026, in multiples of $1,000 principal amount, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2026 Notes on each applicable trading day as determined by the Company; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the indenture governing the 2026 Notes) per $1,000 principal amount of 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the 2026 Notes on each such trading day; (3) with respect to any 2026 Notes that the Company calls for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after August 15, 2026, holders may convert all or any portion of their 2026 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.

During the three and nine months ended September 30, 2022, the conditions allowing holders of the 2026 Notes to convert were not met.

The 2026 Notes are senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2026 Notes; equal in right of payment with the Company’s existing and future liabilities that are not so subordinated; effectively subordinated to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company.

Prior to the adoption of ASU 2020-06 on January 1, 2022, the Company separated the 2026 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that did not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $162.5 million and was determined by deducting the fair value of the liability component from the par value of the 2026 Notes. The equity component was not remeasured as long as it continued to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, was amortized to interest expense at an effective interest rate over the contractual term of the 2026 Notes. This accounting treatment no longer applies under ASU 2020-06.

Prior to the adoption of ASU 2020-06 on January 1, 2022, the Company allocated the total amount incurred of approximately $12.2 million to the liability and equity components of the 2026 Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component were approximately $8.5 million, were recorded as an additional debt discount and are amortized to interest expense using the effective interest method over the contractual term of the 2026 Notes. Issuance costs attributable to the equity component were approximately $3.7 million and recorded as a reduction of additional paid in capital in stockholders’ equity. This accounting treatment no longer applies under ASU 2020-06.

24

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In accounting for the 2026 Notes after the adoption of ASU 2020-06, the 2026 Notes are accounted for as a single liability, and the carrying amount of the 2026 Notes is $509.0 million as of September 30, 2022, consisting of principal of $517.5 million, net of issuance costs of $8.5 million. The 2026 Notes were classified as long term liabilities as of September 30, 2022.The remaining term over which the 2026 Notes’ debt issuance costs will be amortized is 4.2 years. The effective interest rate on the debt was 0.40% for the three and nine months ended September 30, 2022.

In connection with the offering of the 2026 Notes, the Company entered into privately-negotiated capped call option transactions with certain counterparties (the “2026 capped calls”). The 2026 capped calls each have an initial strike price of approximately $75.23 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes. The 2026 capped calls have initial cap prices of $105.58 per share, subject to certain adjustment events. The 2026 capped calls cover, subject to anti-dilution adjustments, approximately 6.88 million shares of common stock. The 2026 capped calls are generally intended to reduce or offset the potential dilution to the common stock upon any conversion of the 2026 Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The 2026 capped calls expire on December 15, 2026, subject to earlier exercise. The 2026 capped calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. In addition, the 2026 capped calls are subject to certain specified additional disruption events that may give rise to a termination of the 2026 capped calls, including changes in law, failure to deliver, and hedging disruptions. The 2026 capped calls are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost of $46.1 million incurred to purchase the 2026 capped calls was recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheet.

The net carrying amount of the liability component of the Notes as of September 30, 2022 (post-ASU 2020-06 adoption) and as of December 31, 2021 (pre-ASU 2020-06 adoption) was as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Principal	$	747,500	$	747,500
Unamortized discount	—		(162,960)
Unamortized issuance costs	(11,025)		(10,302)
Net carrying amount	$	736,475	$	574,238

The net carrying amount of the equity component of the Notes as of September 30, 2022 (post-ASU 2020-06 adoption) and as of December 31, 2021 (pre-ASU 2020-06 adoption) was as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Proceeds allocated to the conversion options (debt discount)	$	—	$	215,434
Issuance costs	—		(5,783)
Net carrying amount	$	—	$	209,651

The following table sets forth the interest expense recognized related to the Notes:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Contractual interest expense	$	431	$	431	$	1,294	$	1,294
Amortization of issuance costs	946		630		2,831		1,858
Amortization of debt discount	—		8,396		—		24,770
Total interest expense	$	1,377	$	9,457	$	4,125	$	27,922

Interest expense of $1.4 million and $4.1 million are reflected as a component of interest expense, net in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2022, respectively.

25

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 9. Acquisitions

In February 2022, the Company completed the acquisition of 100% of the equity of WildHealth, Inc. (“WildHealth”), a precision medicine company operating in the United States, for a total purchase price of $22.3 million. The purchase price consisted of approximately $4.6 million in cash and $17.7 million in shares of common stock of the Company. As part of the purchase price, the Company issued 776,825 common shares that had a total fair value of $20.8 million based on the closing market price of $26.81 on the acquisition date of February 7, 2022. This acquisition is part of the Company’s strategy to accelerate its technology-driven healthcare offerings by combining a rich healthcare data platform with Conversational AI to enable B2B healthcare brands to scale and personalize patient engagement. The transaction was accounted for as a business combination. In connection with the acquisition, the Company entered into stock forfeiture agreements with certain employees of WildHealth, under which a portion of the purchase price will be subject to vesting conditions based on continuing employment post acquisition. The Company has allocated the purchase consideration subject to the stock forfeiture agreements between pre and post combination periods.

Former stockholders of WildHealth have the right to receive in the aggregate up to an additional $120.0 million earn-out (to be settled in the Company’s equity or cash at the Company’s election, but with the cash election restricted to 18.0 percent of the total earn-out) based upon satisfaction of certain financial milestones over the period from October 31, 2022 through December 31, 2025. The Company has accounted for the earn-out as a compensation arrangement in accordance with ASC 718, “Compensation - Stock Compensation,” pursuant to which such earn-out payments are liability classified to be recognized over the requisite service periods. For the earn-outs, the Company accrued $14.7 million and $38.2 million for the three and nine months ended September 30, 2022, respectively, which is reflected as a component of other liabilities and accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets and as a component of stock-based compensation expense in the accompanying condensed consolidated statements of operations.

The purchase price allocation resulted in approximately $15.5 million of goodwill and $8.3 million of intangible assets. WildHealth is part of the Business Segment and is a separate reporting unit. Goodwill is primarily attributed to synergies from future expected economic benefits, including enhanced revenue growth from expanded capabilities. The goodwill will not be deductible for tax purposes. The intangible assets are being amortized over their expected period of benefit. A deferred tax liability for the identified intangibles has been recorded for $1.6 million. The Company recorded an indemnification asset of $1.2 million relating to a pre-acquisition liability assumed.

The following table summarizes the fair value amounts of identifiable assets acquired and liabilities assumed at the acquisition date:

26

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	WildHealth Acquisition
	(In thousands)
Assets acquired
Cash	$	1,353
Other current assets	382
Fixed assets	248
Intangible assets	8,300
Other assets	1,037
Total assets acquired	$	11,320
Liabilities assumed
Current liabilities assumed	$	(1,463)
Deferred tax liabilities	(1,603)
Other liabilities assumed	(1,500)
Total liabilities assumed	(4,566)
Net assets acquired	6,754
Total acquisition consideration	22,265
Goodwill	$	15,511

Other current assets acquired in connection with the acquisition consisted primarily of accounts receivable and other short term assets. Current liabilities assumed in connection with the acquisition consisted primarily of accounts payable, deferred revenue and other short term liabilities. The following is the breakout of the intangible assets acquired:

	Fair Value		Useful life
	(In thousands)
Amortizing intangible assets:
Developed technology	$	7,100	5.0 years
Trade name	600		5.0 years
Fellowship content	600		5.0 years
Total amortizing intangible assets	$	8,300

The Company applied a multi-period excess earnings method of the income approach to estimate the fair values of the intangible assets acquired. The intangible assets acquired in the business acquisition were developed technology, trade name, and fellowship content for the fair value of $8.3 million, determined based on the estimated fair value of expected after-tax cash flows attributable to annual recurring revenue from customers. The Company applied various estimates and assumptions with respect to forecasted revenue growth rates, the revenue attributable to the existing customers over time and the discount rate. The fair values assigned to the other tangible and identifiable intangible assets acquired and liabilities assumed as part of the business combination were based on management’s estimates and assumptions. The Company began amortizing the intangible assets on the date of acquisition over a period of five years based on expected future cash flow. The amortization expense is recorded to amortization of purchased intangibles in the condensed consolidated statements of operations.

The Company incurred $0.3 million in acquisition costs related to the WildHealth transaction that was expensed in the period incurred, of which the amount expensed for the three months ended September 30, 2022 was immaterial, and is included in general and administrative expense in the accompanying condensed consolidated statements of operations.

Note 10. Leases

The Company has operating and finance leases for its corporate offices and other service agreements. Its leases have remaining lease terms of less than one to four years, some of which include options to extend.

In connection with the leases, the Company recognized operating lease right of use assets of $2.3 million and $2.0 million and an aggregate lease liability of $3.9 million and $6.1 million in its condensed consolidated balance sheet as of September 30, 2022 and December 31, 2021, respectively.

27

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On July 13, 2020, the Company announced its decision to transition to an employee-centric model under which employees work remotely rather than in traditional offices. In connection with this decision, the Company abandoned 14 leases in its global portfolio of office leases during 2020. As a result, the Company recognized accelerated amortization to fully reduce the carrying value of the associated right of use assets between the decision date and the cease use date. During the second quarter of 2021, the Company decided to reoccupy some of its leased space to provide its employees with the option of working in an office space environment if they choose to do so. There were no changes to the accounting for the lease liabilities associated with the leased office spaces. During the nine months ended September 30, 2021, the Company had a $3.5 million gain resulting from the settlement of leases.

As of September 30, 2022, in connection with a lease in Israel, the Company was required to pledge cash as collateral security to be maintained at an Israeli bank. The collateral security would remain in control of the bank, to be available in order to satisfy outstanding obligations under the lease contracts. Accordingly, the Company had cash at an Israeli bank of approximately $0.2 million at September 30, 2022, which is recorded as restricted cash in Prepaid expenses and other current assets in the condensed consolidated balance sheets. In the third quarter of 2021, the Company entered into a new lease in Australia and was required to pledge $0.2 million in cash as collateral security, which is also recorded as restricted cash in Prepaid expenses and other current assets in the condensed consolidated balance sheets.

The Company continues to actively assess its global lease portfolio. However, any additional de-recognition of right of use assets and incurrence of various one-time expenses in connection with early termination of additional leases are not expected to be material to its financial condition or results of operations.

Supplemental cash flow information related to leases for the periods listed are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,201	$	651	$	3,584	$	1,894
Operating cash flows for finance leases	44		77		162		256
Financing cash flows for finance leases	936		876		2,785		2,604

The components of lease costs for the periods listed are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Finance lease cost
Amortization of right of use assets	$	929	$	908	$	2,762	$	2,696
Interest	44		77		162		256
Operating lease cost	1,211		2,324		5,621		5,805
Total lease cost	$	2,184	$	3,309	$	8,545	$	8,757

28

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	September 30, 2022		September 30, 2021
Weighted Average Remaining Lease Term:
Operating leases	1.5 years		2.7 years
Finance leases	1.3 years		2.1 years
Weighted Average Discount Rate:
Operating leases	7	%	7	%
Finance leases	4	%	4	%

Supplemental balance sheet information related to leases was as follows:

	Classification on the Condensed Consolidated Balance Sheet	September 30, 2022		December 31, 2021
		(In thousands)
Assets
Operating right of use assets	Operating lease right of use assets	$	2,270	$	1,977
Finance right of use assets	Property and equipment, net	3,998		6,797
Liabilities
Current liabilities:
Operating lease liability	Operating lease liability	$	3,221	$	3,380
Finance lease liability	Accrued expenses and other current liabilities	3,412		3,738
Non-current liabilities:
Operating lease liability	Operating lease liability, net of current portion	$	698	$	2,733
Finance lease liability	Other liabilities	277		2,780

Future minimum lease payments under non-cancellable operating and finance leases (with an initial or remaining lease term in excess of one year) are as follows:

	September 30, 2022
	Operating Leases		Finance Leases
	(In thousands)
2022 (remaining three months at September 30, 2022)	$	1,256	$	980
2023	2,242		2,609
2024	268		109
2025	304		81
2026	127		—
Total minimum lease payments	4,197		3,779
Less: present value adjustment	(278)		(90)
Present value of lease liabilities	$	3,919	$	3,689

Note 11. Fair Value Measurements

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

29

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

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

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

Financial Assets and Liabilities

The carrying amount of cash, accounts receivable, and accounts payable approximate their fair value due to their short-term nature. The Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy as of September 30, 2022 and December 31, 2021, are summarized as follows:

	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	321,553	$	—	$	—	$	321,553
Total assets	$	321,553	$	—	$	—	$	321,553
Liabilities
Earn-outs treated as contingent consideration	$	—	$	—	$	23,282	$	23,282
Earn-outs treated as liability awards	—		—		41,843		41,843
Total liabilities	$	—	$	—	$	65,125	$	65,125

	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	416,178	$	—	$	—	$	416,178
Total assets	$	416,178	$	—	$	—	$	416,178
Liabilities
Contingent earn-out	$	—	$	—	$	29,830	$	29,830
Total liabilities	$	—	$	—	$	29,830	$	29,830

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

The Company’s money market funds are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as Level 1 within the fair value hierarchy. The Company’s contingent earn-out liability is measured at fair value on a recurring basis and is classified as Level 3 within the fair value hierarchy. On a nonrecurring basis, the Company uses fair value measures when analyzing asset impairment. Long-lived tangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present and the review indicates that the assets will not be fully recoverable, based on

30

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

undiscounted estimated cash flows over the remaining amortization periods, their carrying values are reduced to estimated fair value. The Company uses an income approach and inputs that constitute Level 3.

As of September 30, 2022, the fair value of the Notes, as further described in Note 8 – Convertible Senior Notes, Net and Capped Call Transactions above, was approximately $486.9 million. Management determines the fair value by utilizing an independent valuation specialist using the antithetic variable technique which is considered a Level 2 fair value measurement.

The changes in fair value of the Level 3 liabilities are as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Balance, beginning of year	$	29,830	$	—
Additions in the period	45,017		29,830
Change in fair value of contingent consideration	(8,568)		—
Change in fair value of liability awards	(1,154)		132
Payments	—		(132)
Balance, end of period	$	65,125	$	29,830

Certain former stakeholders of the Company’s acquisitions are eligible to receive additional cash or share considerations based on the attainment of certain operating metrics in the periods subsequent to the acquisitions. These earn-out arrangements are accounted for as either contingent considerations arrangements or compensation arrangements. Contingent considerations are fair valued using significant inputs that are not observable in the market.

The earn-outs determined to be compensatory is remeasured each reporting period based on whether the performance targets are probable of being achieved and recognized over the related service periods. For the three and nine months ended September 30, 2022, $15.5 million and $42.9 million, respectively, was recognized as a component of stock-based compensation expense in the accompanying condensed consolidated statements of operations.

Note 12. Commitments and Contingencies

Employee Benefit Plans

The Company’s 401(k) policy is a Safe Harbor Plan, whereby the Company matches 100% of the first 3% of eligible compensation and 50% of the next 2% of eligible compensation. Furthermore, the match is immediately vested. Salaries and related expenses include $2.8 million and $1.0 million of employer matching contributions for the three months ended September 30, 2022 and 2021, respectively, and $5.8 million and $2.8 million for the nine months ended September 30, 2022 and 2021.

Letters of Credit

As of September 30, 2022, the Company had a letter of credit totaling $0.9 million as a security deposit for the due performance by the Company of the terms and conditions of a supply contract.

Sales Tax Liabilities

The Company is in the process of finalizing its sales tax liability analysis for states in which it has economic nexus. During the first quarter of 2020, the Company determined it was probable it would be subject to sales tax liabilities, plus applicable interest in these states, and the Company has estimated the potential exposure to range between $2.5 million to $6.3 million. The Company determined that its best estimate of what would be reasonably expected for it to settle the potential exposure was $2.5 million and accordingly, the Company accrued this amount with a corresponding charge to earnings as of March 31, 2020. As of September 30, 2022, there is a $1.1 million accrual balance for sales tax liabilities. The decrease in the balance of this accrual is primarily due to payments made for the sales tax liabilities.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 13. Stockholders’ Equity

Common Stock

As of September 30, 2022, there were 200,000,000 shares of common stock authorized, 77,934,440 shares issued, and 75,188,197 shares outstanding. As of December 31, 2021, there were 200,000,000 shares of common stock authorized, 74,980,546 shares issued, and 72,234,303 shares outstanding. The par value for shares of common stock is $0.001 per share.

Preferred Stock

As of September 30, 2022 and December 31, 2021, there were 5,000,000 shares of preferred stock authorized, and no shares were issued or outstanding. The par value for shares of preferred stock is $0.001 per share.

Stock-Based Compensation

Stock Option Plans

The Company’s 2019 Stock Incentive Plan, as amended and restated (the “2019 Plan”), became effective on April 11, 2019. The 2019 Plan allows the Company to grant incentive stock options and restricted stock units to its employees and directors to participate in the Company’s future performance through stock-based awards at the discretion of the board of directors. On April 19, 2021, the Company’s board of directors amended the plan and authorized 5,000,000 new shares for issuance. The number of shares authorized for issuance is 40,067,744 shares in the aggregate. Options to acquire common stock granted thereunder have ten-year terms. As of September 30, 2022, approximately 2.0 million shares of common stock remained available for issuance (taking into account all option exercises and other equity award settlements through September 30, 2022).

Employee Stock Purchase Plan

There are 1,000,000 shares authorized and reserved for issuance under the 2019 Employee Stock Purchase Plan. As of September 30, 2022, approximately 0.5 million shares of common stock remained available for issuance under the 2019 Employee Stock Purchase Plan (taking into account all share purchases through September 30, 2022).

Inducement Plan

There are 6,159,009 shares of common stock authorized and reserved for issuance under the Inducement Plan. As of September 30, 2022, approximately 1.4 million shares of common stock remained available for issuance under the Inducement Plan (taking into account all option exercises and other equity award settlements through September 30, 2022).

Stock Option Activity

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

	Stock Option Activity			Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	Options	Weighted Average Exercise Price
	(In thousands)	(Per share)		(In years)	(In thousands)
Balances outstanding at December 31, 2021	4,782	$	27.52	6.77	$	62,300
Granted	802	22.75
Exercised	(200)	6.27
Cancelled or expired	(870)	38.52
Balances outstanding at September 30, 2022	4,514	25.28		6.58	1,471
Options vested and expected to vest	1,187	31.64		8.48	895
Options exercisable at September 30, 2022	2,680	$	20.67	5.21	$	476

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The total fair value of stock options exercised during the nine months ended September 30, 2022 was approximately $7.4 million. As of September 30, 2022, there was approximately $24.8 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of approximately 2.6 years.

Restricted Stock Unit Activity

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

	Restricted Stock Unit Activity
	Number of Shares	Weighted Average Grant Date Fair Value		Aggregate Fair Value
	(In thousands)	(Per share)		(In thousands)
Balances outstanding at December 31, 2021	3,732	$	43.63	$	133,308
Awarded	4,205	19.76
Vested	(1,711)	30.07
Forfeited	(980)	42.43
Non-vested and outstanding at September 30, 2022	5,246	$	29.17	$	49,420
Expected to vest	3,233	$	29.43	$	30,459

RSUs granted to employees generally vest over a three to four-year period or upon achievement of certain performance conditions. As of September 30, 2022, total unrecognized compensation cost, adjusted for estimated forfeitures, related to nonvested RSUs was approximately $130.1 million and the weighted-average remaining vesting period was 2.8 years.

For the three months ended September 30, 2022 and 2021, the Company accrued approximately $0.0 million and $5.1 million in cash rewards, respectively, and for the nine months ended September 30, 2022 and 2021, the Company accrued approximately $11.9 million and $15.5 million in cash awards, respectively, to be settled in shares of the Company’s stock and recorded a corresponding expense, which is included as a component of stock-based compensation expense in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021, respectively.

Stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations and cash flows was $31.9 million and $18.3 million for the three months ended September 30, 2022 and 2021, respectively, and $100.3 million and $48.0 million for the nine months ended September 30, 2022 and 2021, respectively.

The per share weighted average fair value of stock options granted was $7.35 and $29.13 during the three months ended September 30, 2022 and 2021, respectively. The per share weighted average fair value of stock options granted was $11.16 and $26.98 during the nine months ended September 30, 2022 and 2021, respectively. The fair value of each option grant is estimated on the date of grant, adjusted for estimated forfeitures, using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2022	2021	2022	2021
Dividend yield	0.00%	0.00%	0.00%	0.00%
Risk-free interest rate	2.82% - 3.05%	0.72% - 1.02%	1.62% - 3.38%	0.46% - 1.02%
Expected life (in years)	5	5	5	5
Historical volatility	59.74% - 61.22%	53.51% - 53.67%	53.87% - 61.22%	53.51% - 54.55%

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

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

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

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

Note 14. Restructuring

During the second quarter of 2022, LivePerson began a restructuring initiative to realign the Company’s cost structure to better reflect significant product and business model innovation and changes over the past year due to acquisitions and factors outside the control of the Company. As part of the restructuring initiative, the Company reoriented its global product and engineering organization for greater efficiency and focus, and reallocated some spending to increase its investment in customer success and go-to-market initiatives. The Company believes these initiatives will better align resources to provide further operating flexibility and position the business for long-term success. In connection with the restructuring initiatives, the Company recognized restructuring costs of $7.1 million and $17.9 million, respectively, during the three and nine months ended September 30, 2022, respectively, which is included in restructuring costs in the accompanying condensed consolidated statements of operations. The majority of these costs relate to the Company's Business segment. Such costs primarily include severance and compensation costs.

In 2020, the Company went through a re-evaluation of its real estate needs. In connection with this re-evaluation it was decided in July 2020 that the Company would significantly reduce the real estate space it leases. This decision resulted in the significant reduction of the real estate space the Company leases and the removal of the associated right of use assets. Furthermore, this resulted in various one-time expenses in connection with the abandonment of the majority of the Company’s leased facilities. The lease restructuring costs noted below are a result of this transition to an employee-centric model.

The following table presents the detail of the liability for the Company’s restructuring charges, which is included within accrued expenses and other current liabilities within the accompanying condensed consolidated balance sheet, for the periods presented:

	September 30, 2022		December 31, 2021
	(In thousands)
Balance, beginning of year	$	1,694	$	4,732
Lease restructuring costs	339		724
Severance and other compensation associated costs	17,610		2,673
Cash payments	(13,933)		(6,435)
Balance, end of period	$	5,710	$	1,694

The following table presents the detail of expenses for the Company’s restructuring charges for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Restructuring costs:
Lease restructuring costs	$	—	$	44	$	339	$	594
Severance and other compensation associated costs	7,111		—		17,610		2,675
Total restructuring costs	$	7,111	$	44	$	17,949	$	3,269

Note 15. Legal Matters

The Company filed an intellectual property suit against [24]7 Customer, Inc. (“[24]7”) in the Southern District of New York on March 6, 2014 seeking damages on the grounds that [24]7 reverse engineered and misappropriated the Company’s technology to develop competing products and misused the Company’s business information. On June 22, 2015, [24]7 filed suit

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against the Company in the Northern District of California alleging patent infringement. On December 7, 2015, [24]7 filed a second patent infringement suit against the Company, also in the Northern District of California. On March 16, 2017, the New York case was voluntarily transferred and consolidated with the two California cases in the Northern District of California (the “Court”) for all pre-trial purposes. Rulings by both the Court and the United States Patent and Trademark Office in the Company’s favor have invalidated the majority of [24]7 patents that were asserted in the patent cases.

The Company believes the remaining claims filed by [24]7 are entirely without merit and intends to defend them vigorously. Trial for the Company’s intellectual property and other claims asserted against [24]7 related to three of the customers at issue occurred on May 24, 2021 and the jury awarded approximately $30.3 million in favor of the Company, including approximately $6.7 million in compensatory damages and approximately $23.6 million in punitive damages. After the jury reached its verdict, additional post-trial motions were filed by [24]7 and LivePerson, including [24]7 asking the Court to order a new trial, overturn the jury’s verdict, or reduce the amount of punitive damages the jury awarded, and LivePerson requested interest on the judgment.

The Company and [24]7 also reached agreement on the terms of a permanent injunction, and that additional costs are owed to the Company in the amount of $0.4 million, which the Court has entered. On July 28, 2022, the Court denied [24]7’s post-trial motions and granted LivePerson’s motion for interest, awarding approximately an additional $4.3 million. On August 26, 2022, [24]7 elected to appeal these matters. Accordingly, no amounts for the judgment have been reflected in the Company’s financial statements. Trial for [24]7’s patent infringement claims has been set for late October 2023 and trial for the Company’s remaining trade secret claims asserted against [24]7 has been set for early March 2024.

From time to time, the Company is involved in or subject to legal, administrative and regulatory proceedings, claims, demands, and investigations arising in the ordinary course of business, including direct claims brought by or against the Company with respect to intellectual property, contracts, employment and other matters, as well as claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In addition, in the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosure related to such matter as appropriate and in compliance with ASC 450, “Contingencies.”

The accruals or estimates, if any, resulting from the foregoing analysis, are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, the Company will, as applicable, adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made. From time to time, third parties assert claims against the Company regarding intellectual property rights, privacy issues, and other matters arising in the ordinary course of business.

Note 16. Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are expected to become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

The Company includes interest accrued on the underpayment of income taxes in interest expense and penalties, if any, related to unrecognized tax benefits in general and administrative expenses. The Company recorded a valuation allowance against its U.S. deferred tax asset as it considered its cumulative loss in recent years as a significant piece of negative evidence. Since valuation allowances are evaluated by jurisdiction, the Company believes that the deferred tax assets related to LivePerson Australia Holdings Pty. Ltd., LivePerson (UK) Limited, Kasamba Inc., LivePerson Japan and LivePerson Limited (Israel) are more likely than not to be realized as these jurisdictions have positive cumulative pre-tax book income after

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adjusting for permanent and one-time items. During the year ended December 31, 2021, there was an increase in the valuation allowance recorded of $51.7 million.

For the three months ended September 30, 2022, the Company recorded a tax provision of $0.2 million. This amount consists of a tax provision of $0.1 million on operating earnings coupled with a stock compensation tax deficiency of $0.1 million related to stock compensation arrangements of LivePerson, LivePerson (UK) Limited and LivePerson Limited (Israel). For the nine months ended September 30, 2022, the Company recorded a tax provision of $1.3 million. This amount consists of a tax provision of $2.7 million on operating earnings coupled with a stock compensation tax deficiency of $0.2 million related to stock compensation arrangements of LivePerson, LivePerson (UK) Limited and LivePerson Limited (Israel), partially offset by a tax benefit of $1.6 million related to the release of a valuation allowance in conjunction with the WildHealth transaction.

The Company had a valuation allowance on certain deferred tax assets for the year ended December 31, 2021 of $107.1 million. Inherent in the Company’s 2022 annual effective tax rate is an estimated increase in the valuation allowance of $38.1 million, all of which will be recorded as an expense. During 2021, an increase in the valuation allowance in the amount of $34.3 million was recorded as an expense and an additional increase to the valuation allowance of $17.4 million was recorded to goodwill against acquired federal and state net operating losses.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA establishes a 15% corporate minimum tax effective for taxable years beginning after December 31, 2022, and imposes a 1% excise tax on the repurchase after December 31, 2022 of stock by publicly traded U.S. corporations. We currently do not expect the tax-related provisions of the IRA to have a material impact on our financial results.

Note 17. Equity Method Investment

On February 13, 2022, the Company and Pasaca Capital Inc. (“Pasaca”) entered into a joint venture agreement (the “JV Agreement”) to form Claire, a joint venture to build, create, and administer a marketplace for health and well-being diagnostic testing. Claire is intended to operate an app store-like platform to make medical testing and accessing results easier and more informative. Claire is being developed with the goal of creating a single place to shop for testing services from numerous testing providers, including Claire-branded tests and at-home tests. Pursuant to the terms of the JV Agreement, the Company agreed to contribute a total of $19.0 million over a five-year period in exchange for a 19.2% ownership interest in Claire. Pasaca agreed to contribute $80.0 million to Claire over a five-year period in exchange for an 80.8% ownership interest in Claire. As of September 30, 2022, $10.6 million remained to be contributed to Claire by the Company under the terms of the JV Agreement. The Company accounts for its 19.2% interest in Claire using the equity method of accounting. The Company recorded its ownership percentage of losses of Claire in Other income (expense), net for $0.6 million and $0.7 million for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2022, the Company’s equity method investment was $4.0 million and was included in investment in joint venture on the condensed consolidated balance sheet.

Note 18. Variable Interest Entities

The Company prepares its condensed consolidated financial statements in accordance with ASC 810, which provides for the consolidation of VIEs of which the Company is the primary beneficiary.

In February 2022, the Company acquired WildHealth as well as certain variable interests that WildHealth has in four Professional Corporations (“PCs”). The PCs are owned by a medical practitioner in accordance with certain state laws which restrict the corporate practice of medicine and require medical practitioners to own such entities. WildHealth provides management and other services to the PCs in exchange for a management fee and provides financial support to the PCs through a revolving credit arrangement. WildHealth also has separate agreements with the equity holder of the PCs where it may acquire and assign such equity interests for certain PCs. WildHealth consolidates the PCs as VIEs. The Company determined that the PCs are VIEs as WildHealth is the primary beneficiary of the PCs.

The assets, liabilities, revenues, and operating results of the VIEs after elimination of intercompany transactions were not material as of and for the three and nine months ended September 30, 2022.

Note 19. Related Parties

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Related parties are defined as entities related to the Company’s directors or main shareholders as well as equity method affiliates. The Company provides services to Claire, an equity method affiliate (refer to Note 17 – Equity Method Investment for additional information on the equity method affiliate), through the Master Service Agreement (the “MSA”). These services are identified within the MSA’s scope of work and include marketing, end user features, custom software development, and business/management services. Revenues for the services provided to related parties included in the Company’s consolidated statements of operations were $12.9 million and $26.2 million for three and nine months ended September 30, 2022, respectively. Deferred revenues for amounts billed to related parties less recognized revenue included in the Company’s consolidated statements of operations were $20.7 million as of September 30, 2022. Total billings were $34.1 million and accounts receivable were $13.9 million as of September 30, 2022 included in the Company’s condensed consolidated balance sheet.

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

General

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

Overview

LivePerson is a leading Conversational AI company creating digital experiences that are Curiously Human. Conversational AI allows humans and machines to interact using natural language, including speech or text. During the past decade, consumers have made mobile devices the center of their digital lives, and they have made mobile messaging the center of communication with friends, family and peers. The Company’s technology enables consumers to connect with businesses through these same preferred conversational interfaces, including Facebook Messenger, SMS, WhatsApp, Apple Business Chat, Google Rich Business Messenger and Alexa. These messaging conversations harness human agents, bots and AI to power convenient, personalized and content-rich journeys across the entire consumer lifecycle, from discovery and research, to sales, service and support, and increasingly marketing, social, and brick and mortar engagements. For example, consumers can look up product info like ratings, images and pricing, search for stores, see product inventory, schedule appointments, apply for credit, approve repairs, and make purchases or payments - all without ever leaving the messaging channel. These AI and human-assisted conversational experiences constitute the Conversational Space, within which LivePerson has strategically developed one of the industry’s largest ecosystems of messaging endpoints and use cases.

The Conversational Cloud, the Company’s enterprise-class cloud-based platform, enables businesses to become conversational by securely deploying AI-powered messaging at scale for brands with tens of millions of customers and many thousands of agents. The Conversational Cloud powers conversations across each of a brand’s primary digital channels, including mobile apps, mobile and desktop web browsers, SMS, social media and third-party consumer messaging platforms. Brands can also use the Conversational Cloud to message consumers when they dial a 1-800 number instead of forcing them to navigate IVRs and wait on hold. Similarly, the Conversational Cloud can ingest traditional emails and convert them into messaging conversations, or embed messaging conversations directly into web advertisements, rather than redirect consumers to static website landing pages. Agents can manage all conversations with consumers through a single console interface, regardless of where the conversations originated.

LivePerson’s robust, cloud-based suite of rich messaging, real-time chat, AI and automation offerings features consumer and agent facing bots, intelligent routing and capacity mapping, real-time intent detection and analysis, queue prioritization, customer sentiment, analytics and reporting, content delivery, PCI compliance, co-browsing and a sophisticated proactive

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targeting engine. An extensible API stack facilitates a lower cost of ownership by facilitating robust integration into back-end systems, as well as enabling developers to build their own programs and services on top of the platform. More than 40 APIs and software development kits are available on the Conversational Cloud.

For your reference:

•Conversational AI: Conversational AI allows humans and machines to interact using natural language, including speech or text.

•Conversational Space: In the Conversational Space, consumers message with brands on their own schedule, using natural language, to resolve their intents - all on their preferred messaging service. The core capabilities of the Conversational Space are voice and text-based interfaces, powered by AI and humans working together. Conversational Space is the simplest, most intuitive interface of all.

•Conversational Cloud: LivePerson’s enterprise-class, AI-powered Conversational Cloud platform empowers consumers to message their favorite brands, just as they do with friends and family.

LivePerson’s Conversational AI offerings put the power of bot development, training, management and analysis into the hands of the contact center and its agents, the teams most familiar with how to structure sales and service conversations to drive successful outcomes. The platform enables what we call “the tango” of humans, AI and bots, whereby human agents act as bot managers, overseeing AI-powered conversations and seamlessly stepping into the flow when a personal touch is needed. Agents become ultra-efficient, leveraging the AI engine to serve up relevant content, define next-best actions and take over repetitive transactional work, so that the agent can focus on relationship building. By seamlessly integrating messaging with the Company’s proprietary Conversational AI, as well as third-party bots, the Conversational Cloud offers brands a comprehensive approach to scaling automations across their millions of customer conversations.

Complementing the Company’s proprietary messaging and Conversational AI offerings are teams of technical, solutions and consulting professionals that have developed deep domain expertise in the implementation and optimization of conversational services across industries and messaging endpoints. The Company is a leading authority in the Conversational Space. LivePerson’s products, coupled with its domain knowledge, industry expertise and professional services, have been proven to maximize the effectiveness of the Conversational Space and deliver measurable return on investment for LivePerson’s customers. Certain of the Company’s customers have achieved the following advantages from its offerings:

•the ability for each agent to manage as many as 40 messaging conversations at a time, as compared to one at a time for a voice agent and two to four at a time for a good chat agent. Adding AI and bots provides even greater scale to the number of conversations managed;

•labor efficiency gains of at least two times that of voice agents, effectively cutting labor costs by at least 50%;

•improving the overall customer experience, thereby fueling customer satisfaction score increases of up to 20 percentage points, and enhancing retention and loyalty;

•more convenient, personalized and content-rich conversations that increase sales conversion by up to 20%, increase average order value and reduce abandonment;

•more satisfied contact center agents, thereby reducing agent churn by up to 50%;

•a valued connection with consumers via mobile devices, either through native applications, websites, text messages, or third-party messaging platforms;

•leveraged spending that drives visitor traffic by increasing visitor conversions;

•refining and improving performance by understanding which initiatives deliver the highest rate of return; and

•increased lead generation by providing a single platform that engages consumers through advertisements and listings on branded and third-party websites.

As a “cloud computing” or software-as-a service (“SaaS”) provider, LivePerson provides solutions on a hosted basis. This model offers significant benefits over premise-based software, including lower up-front costs, faster implementation, lower total cost of ownership, scalability, cost predictability, and simplified upgrades. Organizations that adopt a fully-hosted, multi-tenant architecture that is maintained by LivePerson eliminate the majority of the time, server infrastructure costs, and information technology (“IT”) resources required to implement, maintain, and support traditional on-premise software.

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To further enhance our platform, in September 2020 we signed a partnership with a digital services and consulting company to transform our technology infrastructure on the public cloud, to build integrated solutions and a global practice around our Conversational Cloud to sell into this company’s channels and global enterprise customer base, and to redefine how the world’s top brands communicate.

More than 18,000 businesses, including HSBC, Orange, and GM Financial use our conversational solutions to orchestrate humans and AI, at scale, and create a convenient, deeply personal relationship with their customers.

LivePerson’s consumer services offering is an online marketplace that connects Experts who provide information and knowledge for a fee via mobile and online messaging with Users. Users seek assistance and advice in various categories including personal counseling and coaching, computers and programming, education and tutoring, spirituality and religion, and other topics.

The key elements of LivePerson’s business solutions strategy include:

Build awareness and drive adoption of the Conversational Space. LivePerson brought our first customer live on messaging in June 2016. Since that time, we have been focused on building awareness for conversational experiences and driving adoption. We have educated businesses on the financial and operational transformation that occurs when a contact center shifts to an asynchronous messaging environment, where the consumer controls the pace of the conversation, which can last minutes, hours or days, from a synchronous call or chat center, where conversations occur in real-time and have a distinct start and end.

A key component of our industry awareness marketing strategy has been to hold multiple global customer summits each year (events in 2020 and 2021 were held virtually in light of the COVID-19 pandemic) that target executives from enterprise customers and prospects, and feature a key theme within the Conversational Space, such as Apple Business Chat, Google Rich Business Messenger, IVR deflection or AI. LivePerson customers are the center point of these summits, presenting why they chose LivePerson for conversational experiences, how they achieved success, and what type of return on investment they have realized. Each attendee then receives a blueprint for how they can pursue similar outcomes. We have found this strategy to drive strong results for LivePerson, as we have seen a greater than 40% conversion rate on opportunities that were created or advanced as part of the customer summits. By year-end 2021, nearly 75% of messaging conversations had automation attached. We will continue to focus on building awareness for the Conversational Space and driving adoption of messaging and AI across our customer base.

Increase messaging volumes by developing a broad ecosystem, expanding customer use cases, and focusing on AI and automation. Our strategy is to drive higher messaging volumes by going both wide across messaging endpoints, deep across consumer use cases, and focusing on AI and automation as the means to deliver powerful scale. We will continue to focus on building awareness for the Conversational Space and driving adoption of messaging and AI across our customer base. LivePerson offers a platform usage pricing model, where customers are offered access to our entire suite of messaging technologies across their entire agent pool for a pre-negotiated cost per interaction. We believe that over time this model will drive higher revenue for LivePerson by reducing barriers to adoption of new messaging endpoints and use cases.

In order to drive broad messaging adoption, it is imperative that the Conversational Cloud integrates to all of the messaging apps that consumers prefer to use for communication and addresses all key use cases. For example, if a consumer is an avid WhatsApp user, and a brand only offers SMS as a messaging option, that consumer may be reluctant to try messaging the brand. Therefore, a key strategy of ours has been to build one of the industry’s broadest ecosystems of messaging endpoints and use cases. In June 2016, we launched with In-App messaging. In 2017, we introduced Facebook Messenger, SMS, Web messaging and IVR deflection integrations. In 2018, we added Apple Business Chat, Google Rich Business Messenger, Line, WhatsApp, Alexa, Google Home, Google Ad Lingo and Twitter. In 2019, we added email, allowing brands to manage emails through the same console they use for messaging, and to convert legacy emails into messaging conversations. We also added social monitoring and conversational tools for Twitter and Facebook, and introduced proactive messaging, allowing brands to transform traditional one-way notifications such as flight cancellations or phone plan overage alerts into two-way conversations. Finally, we connected to Facebook and WhatsApp digital advertisements, enabling consumers to initiate messaging conversations for marketing and customer care directly within the advertisement. In 2020, we added Instagram and Google’s Business Messages, allowing brands to bring customer-initiated conversations into the Conversational Cloud directly from Instagram, Google Search, and Google Maps. In 2021, we acquired Callinize, Inc. (dba Tenfold) (“Tenfold”), which allows our brands to bring the LivePerson Conversational Cloud into other applications, starting with Salesforce and expanding into other leading CRM and Helpdesk platforms. The ability to power conversational experiences beyond our own workspace opens up further messaging volumes and workflows for LivePerson to participate in.

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Each channel and use case added opens the door to new consumers, providing brands a greater opportunity to shift share away from their legacy contact center channels into messaging. For example, in 2019, leading airlines launched on WhatsApp and Apple Business Chat with the ability to make secure payments; a baseball stadium launched an automated conversational concierge providing answers to a wide range of questions from restroom locations to player stats; and a multinational telecommunications company used proactive two-way messaging for outbound campaigns. In 2020, one of the largest Telcos in Australia fully virtualized their contact centers, a leading U.S. quick-serve restaurant launched on Facebook Messenger to help customers order meals, one of the biggest banks in the world launched an Apple Business Chat channel to provide a secure way to perform day-to-day banking, and one of the world’s largest jewelry retailers used the Conversational Cloud and QR codes to sell millions of dollars of product. In 2021, one of the ten largest healthcare companies in the world launched web messaging to enable their customers to check the status of their orders and request prescription refills with ease, and a multi-billion-dollar entertainment and media company enabled their consumers to plan trips, buy tickets or change reservations with in-app messaging.

LivePerson makes the management of all these disparate channels seamless to the brand. AI-based intelligent routing, queuing and prioritization software orchestrates these conversations at scale, regardless of which messaging endpoint they originated from, so that human and bot agents can engage with all customers through just one console.

We believe LivePerson is leading the structural shift to Conversational AI. LivePerson is powering Conversational AI, automation and messaging strategies across a growing number of use cases from care and sales, to marketing, social, conversational advertising and brick and mortar. Our Conversational AI leadership and the increase in adoption have influenced LivePerson’s enterprise and mid-market revenue retention rate, (the trailing-twelve-month change in total revenue from existing customers after upsells, downsells and attrition) which was above 100% but just below our target range of 105% to 115%. The benefit can also be seen in LivePerson’s average revenue per user (“ARPU”) for our enterprise and mid-market customers, which increased approximately 18% for the trailing twelve months ended September 30, 2022 to $675,000 from approximately $570,000 for the trailing twelve months ended September 30, 2021. We believe these ARPU trends are a clear indication of how LivePerson’s strategy to drive messaging adoption has successfully influenced our revenue growth by taking share from legacy communication channels.

Attract the industry’s best AI, machine learning and conversational talent. We believe that AI and machine learning are critical to successfully scaling in the Conversational Space, and that in order to develop the industry’s leading technology, we need to attract the industry’s best talent. We have hired some of the industry’s brightest data scientists, machine learning engineers and automation engineers, many from firms such as Nike, Amazon.com, Microsoft and Target, who are working exclusively on applying AI to the Conversational Space. LivePerson also expanded its development talent base in Germany, and added key development talent through the acquisitions of BotCentral in Mountain View, California; e-bot7 GmbH (“e-bot7”) in Munich, Germany; and VoiceBase, Inc. (“VoiceBase”) in San Francisco, California.

Bring to market best-in-class AI and machine learning technologies designed for the Conversational Space. We believe that in the last decade many vendors introduced AI and bot offerings that created frustrating experiences for consumers and businesses alike, which in turn has eroded trust in automation. Many of these solutions have proven difficult to build and scale, and have been limited by stand-alone implementations that lacked the measurement, reporting and human oversight of conversational platforms such as the Conversational Cloud. In December 2018, LivePerson announced its patent-protected AI engine that is designed to overcome these shortcomings and help brands rapidly bring to market conversational AI that can scale to millions of interactions, while increasing customer satisfaction and conversion rates.

Unlike alternative solutions designed solely for IT departments, LivePerson’s Conversational AI was built to be used by developers and contact center agents. By putting the power of conversational design and bot management in the hands of contact center agents, LivePerson’s Conversational AI gives brands the ability to leverage the employees closest to the customer, those who are most versed in the voice of the brand, and with the most expertise in how to craft successful outcomes for customer service and sales journeys.

Some of the key innovations behind LivePerson’s Conversational AI include:

•a holistic approach to scaling AI by combining consumer facing bots, agent facing bots, intelligent routing and real-time intent understanding, with an analytics dashboard that helps users focus on the intents that are impacting their business and prioritize which intents to automate next;

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•bot building software that is based on dialogue instead of workflow or code, so non-technical employees like contact center agents can design automations;

•leveraging a data moat from hundreds of millions of conversations to feed the machine learning that rapidly and accurately detects consumer sentiment and intents in real-time. Customers of LivePerson can use intent understanding for advanced routing, next-best actions, and to fully contain conversations with automation;

•the establishing of contact center agents as bot managers, ensuring that every conversation is safeguarded by a human and that agents are continuously training the AI to be smarter and drive more successful outcomes;

•powerful Assist technology that multiplies the efficiency of agents by analyzing intents in real time and then suggesting next best actions, predefined content, and bots that can take over transactional work;

•pre-built templates for target verticals that provide out of the box support for the top intents and back-end integrations;

•the ability to bootstrap conversations with existing transcripts, reducing design effort and speeding time to market;

•third-party AI natural language understanding (“NLU”) integration, so customers are not boxed into one vendor; and

•AI analytics and reporting tailored to the Conversational Space, providing brands with immediate, actionable insights about their businesses and contact center operations.

Our strategy is to continue to enhance the Conversational AI engine and related products, by leveraging our global research and development (“R&D”) footprint and substantial library of mobile and online conversational data, with the aim of increasing agent efficiency, decreasing customer care costs, improving the customer experience and increasing customer lifetime value.

Sustain our leadership position by aligning brands to a vision that transforms how they communicate with consumers and delivers a superior return on brands’ investment. Over the past four years we have made good progress in developing our conversational AI platform and within the next 12 months, we expect to have a solution in place for our automations to self-heal, which is the ultimate goal of any AI platform. Our acquisitions of VoiceBase and Tenfold provide us with a mechanism for data capture in the voice channel. This additional data and the associated analytics and system integration give us an even greater ability to scale the usage of our platforms, by building on our strength in messaging. Brands must adapt their contact centers to an asynchronous messaging environment and leverage a combination of human agents, bots, and AI to achieve scale and efficiencies. When done correctly, the entire consumer lifecycle with a brand will be maintained within the Conversational Space, and traffic will steadily shift away from lower returning traditional voice calls, websites, emails, and apps to higher returning messaging endpoints.

We believe that LivePerson is uniquely positioned to deliver this transformation due to our technology and expertise:

•The Conversational Cloud, LivePerson’s enterprise-class, automation-first, cloud-based platform, was designed for AI-assisted and human-powered messaging in mobile and online channels. The platform offers best-in-class security and scalability, offers the broadest ecosystem of messaging endpoints, is designed for ease of use, and features an AI engine custom built for the Conversational Space, intent recognition, robust real-time reporting, role-based real-time analytics, predictive intelligence, and innovations in customer satisfaction and connection measurement. Additionally, the Conversational Cloud is an open platform with pre-built, enterprise-grade integrations into back-end systems as well as the ability to work across NLU providers.

•The Company believes it has a data moat built on hundreds of millions of conversations across industries, geographies and use cases that is feeding the machine learning engines that power intent understanding.

•The platform has expanded to power conversations across a broad spectrum of channels and use cases, from traditional sales and customer service, to marketing, social, email, advertising and brick and mortar.

•LivePerson has deep domain expertise across verticals and messaging endpoints, a global footprint, referenceable enterprise brands and a team of technical, solutions and consulting professionals to assist customers along their transformational journeys. We are positioned as an authority in the Conversational Space. We have developed a Transformation Model that is introduced to existing and prospective customers to help guide them on their journeys from legacy and oftentimes inefficient legacy voice, email and chat solutions to modern conversational ones powered by messaging and AI.

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•The Company has developed Gainshare - a Transformation Model that is introduced to existing and prospective customers to help guide them on their journeys from legacy and oftentimes inefficient legacy voice, email, and chat solutions to modern conversational ones powered by messaging and AI. Gainshare is a fully managed solution where LivePerson not only provides the messaging and AI automation technology, but also the labor, automation, and end-to-end program management, leveraging the Company’s expertise with Conversational AI and messaging operations. Gainshare is an option for brands that want to accelerate a transformation to Conversational AI, or that want a worry-free solution where LivePerson manages the entire operation, from staffing to automation building and optimization, to conversation design and consumer experience. Gainshare pricing is bespoke, and is typically structured around a brand’s desired goals, whether driving incremental revenue or reducing operational costs.

We believe that LivePerson’s differentiated approach to the Conversational Space, combined with our unique technology and expertise, has established us as a market leader with an ability to deliver superior returns on investment. LivePerson customers manage as many as 40 messaging conversations at a time, as compared to one at a time for a voice agent and two to four at a time for a good chat agent. Adding AI and bots provides even greater scale to the number of conversations managed. Our customers often see labor efficiency gains of at least two times that of voice agents, effectively cutting labor costs by at least 50%. Furthermore, our ability to deliver more convenient, personalized and content-rich conversations often drives increases in customer satisfaction of up to 20 percentage points and increases in sales conversions of up to 20%, while enhancing average order value, customer retention and loyalty.

Strengthen our position in both existing and new industries. We plan to continue to develop our market position by increasing our customer base, and expanding within our installed base. We plan to continue to focus primarily on key target markets: consumer/retail, telecommunications, financial services, travel/hospitality, technology and automotive within both our enterprise and mid-market sectors, as well as the small business sector (“SMB”). In 2021, we continued to grow in verticals such as healthcare and financial services. We plan to continue experimenting with new conversational businesses, including some that are in regulated industries, like online banking and healthcare. We are increasingly structuring our field organization to emphasize our domain expertise and strengthen customer relationships across target industries.

Continue to build our international presence. We are focused on continuing to build our international presence through expansion of our international revenue contribution, which accounted for 35% of total revenue in 2021. We are generating positive results from our recent investments in the Asia-Pacific, Europe, and Latin America regions. Expanding go-to-market capacity in international theaters is one of our key strategic focuses and also part of our motivation for our recent acquisition of e-bot7.

Leverage our open architecture to support partners and developers. In addition to developing our own applications, we continue to cultivate a partner eco-system capable of offering additional applications and services to our customers. We integrate into third-party messaging endpoints including SMS, Facebook Messenger, Apple Business Chat, Google Rich Business Messenger, Line, WhatsApp, Alexa, Google Home, WeChat, Google Ad Lingo, Google Search, Google Maps, Instagram and Twitter, multiple IVR vendors, and dozens of branded apps. The Conversational Cloud integrates our proprietary messaging and Conversational AI with third-party bot offerings, empowering our customers to manage a mix of different bots, human agents and technologies from one control panel, thereby optimizing contact center efficiency. LivePerson’s proprietary and third-party AI/bots enable brands to partially or fully automate communications with their customers.

In addition, we have opened up access to our platform and our products with more than 40 APIs and software development kits that allow customers and third parties to develop on top of our platform. Customers and partners can utilize these APIs to build our capabilities into their own applications and to enhance our applications with their services. In 2019, we launched LivePerson Functions, a serverless function as a service (“FaaS”) integration which enables brands to develop custom behaviors within LivePerson’s conversational platform to easily and rapidly tailor conversation flows to their specific needs. In 2022, we launched our partnership with Celonis to embed VoiceBase analytics and Celonis conversation mining into an application capable of analyzing omni-channel conversational data to enable operational improvements and automate the customer journey.

Expand sales partnerships to broaden our presence and accelerate sales cycles. We are focused on broadening our market reach and accelerating sales cycles by partnering with systems integrators, technology providers, business process outsourcers, value added resellers and other sales partners. We formalized a relationship with IBM Global Business Services in 2017 and Accenture in 2018. In 2019, we announced strategic partnerships with TTEC, a leading BPO focused on customer experience, and DMI, a digital transformation company, to redefine the customer experience with digital engagement, messaging, and AI-driven automation. In 2020, a digital services and consulting company joined LivePerson’s network with a

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first-of-its-kind 360 degree partnership focusing not only on capturing the global rising demand for conversational commerce and building a personalized experience for customers, but also driving the transformation for internal corporate messaging and the employee experience through Conversational AI. In 2021, we announced strategic integration partnerships with Google Cloud, Adobe and Medallia to help brands make contact center agents more efficient and effective, and empower and enrich the management of customer and employee experience through the power of AI. Our network also expanded with the Tech Mahindra partnership to help brands deliver personalized conversational experiences to consumers at scale.

Maintain market leadership in technology and security expertise. As described above, we are devoting significant resources to creating new products and enabling technologies designed to accelerate innovation. We evaluate emerging technologies and industry standards and continually update our technology in order to retain our leadership position in each market we serve. We monitor legal and technological developments in the area of information security and confidentiality to ensure our policies and procedures meet or exceed the demands of the world’s largest and most demanding corporations. We believe that these efforts will allow us to effectively anticipate changing customer and consumer requirements in our rapidly evolving industry.

Evaluate strategic alliances and acquisitions when appropriate. In July 2021, we acquired German conversational AI company e-bot7, which propels our self-service capabilities and continued growth across Europe. In October 2021, we acquired VoiceBase, a leader in real-time speech recognition and conversational analytics; and Tenfold, an advanced customer engagement platform for integrating communication systems with leading CRM and support services. In February 2022, we acquired WildHealth, a precision medicine company. Once fully integrated, we expect these acquisitions to allow LivePerson to deliver our AI and automation capabilities, insights, and integration as a single integrated product offering across all channels including voice and messaging.

Key Metrics

Financial overview of the three months ended September 30, 2022 compared to the three months ended September 30, 2021:

•Total revenue increased 9% to $129.6 million from $118.3 million.

•Revenue from our Business segment increased 10% to $120.1 million from $109.2 million.

•Gross profit margin decreased to 66% from 67%.

•Cost and expenses increased 28% to $178.1 million from $139.1 million.

•Net loss increased to $43.2 million from $32.8 million.

•Average annual revenue per enterprise and mid-market customer increased approximately 18% to $675,000 for the trailing-twelve-months ended September 30, 2022, as compared to $570,000 for the trailing twelve months ended September 30, 2021.

•Our target for enterprise and mid-market revenue retention in third quarter of 2022 matches 2021, and is a range of 105% to 115%. Revenue retention rate for enterprise and mid-market customers on the Conversational Cloud was just below our target range for the third quarter of 2022 and the comparable period in 2021. Revenue retention rate measures the percentage of revenue retained at quarter end, from full service customers that were on the Conversational Cloud at the same period a year ago.

Adjusted EBITDA and Adjusted Operating Income (Loss)

To provide investors with additional information regarding our financial results, we have disclosed adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and adjusted operating income (loss), which are non-GAAP financial measures. The tables below present a reconciliation of adjusted EBITDA and adjusted operating income (loss) to net income (loss), the most directly comparable GAAP financial measures.

We have included adjusted EBITDA and adjusted operating income (loss) in this Quarterly Report on Form 10-Q because these are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA and adjusted operating income (loss) can provide a useful measure for period-to-period comparisons of our core business. Additionally, adjusted EBITDA is a key financial

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measure used by the compensation committee of our board of directors in connection with the payment of bonuses to our executive officers. Accordingly, we believe that adjusted EBITDA and adjusted operating income (loss) provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

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

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

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

•    adjusted EBITDA does not consider the impact of acquisition related costs;

•    adjusted EBITDA does not consider the impact of restructuring costs;

•    adjusted EBITDA does not consider the impact of other costs;

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

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

Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including various pre-tax GAAP loss and our other GAAP results. The following table presents a reconciliation of adjusted EBITDA for each of the periods indicated.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Reconciliation of Adjusted EBITDA	2022		2021		2022			2021
	(In thousands)
GAAP net loss	$	(43,248)	$	(32,807)	$	(184,023)		$	(75,121)
Amortization of purchased intangibles and finance leases	5,731		1,831		16,530			4,939
Stock-based compensation	31,940		18,269		100,323			47,967
Contingent earn-out adjustments	(8,568)		—		(8,568)			132
Restructuring costs (1)	7,111		44		17,949			3,269
Depreciation	7,063		6,893		21,414			20,471
Other litigation, consulting and other employee costs (2)	4,772		602		12,643			4,784
Provision for income taxes	249		2,538		1,270			2,285
Acquisition costs	1,002		—		3,124			—
Interest (income) expense, net	(401)		9,442		1,713			27,852
Other expense (income), net (3)	3,454		48		6,660			(3,002)
Adjusted EBITDA (loss)	$	9,105	$	6,860	$	(10,965)	(4)	$	33,576

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(1)Includes severance costs and other compensation related costs of $7.1 million for the three months ended September 30, 2022. Includes severance costs and other compensation related costs of $17.6 million and lease restructuring costs of $0.3 million for the nine months ended September 30, 2022. Includes lease restructuring costs of $0.6 million and severance costs and other compensation related costs of $2.7 million for the nine months ended September 30, 2021.

(2)Includes consulting costs of $0.3 million, litigation costs of $3.3 million and accrued expenses and fees of $1.2 million for the three months ended September 30, 2022. Includes litigation costs of $0.4 million, consulting costs of $0.7 million, and reversals of reserve for sales and use tax liability of $0.5 million for the three months ended September 30, 2021. Includes litigation costs of $6.4 million, accrued expenses and fees of $1.8 million, consulting costs of $1.0 million, and an increase to the reserve for sales and use tax liability of $0.3 million for the nine months ended September 30, 2022, along with $1.0 million of additional litigation costs and $2.1 million of employee-related costs not previously included in adjusted EBITDA (loss) for the periods ended March 31, 2022 and June 30, 2022. Includes litigation costs of $3.2 million, employee benefit cost of $0.6 million, consulting costs of $1.3 million and a reversal of reserve for sales and use tax liability of $0.3 million for the nine months ended September 30, 2021. The treatment of litigation costs in the table above is now consistent with treatment of litigation costs in periods prior to 2022.

(3)Includes $0.2 million of other income related to the settlement of leases, offset by $2.5 million of costs related to elimination entries for our Equity Method Investment, for the three and nine months ended September 30, 2022. The remaining amount of other expense (income) for the three and nine months ended September 30, 2022 is attributable to currency rate fluctuations. Includes $0.2 million and $3.5 million of other income related to the settlement of leases for the three and nine months ended September 30, 2021, respectively. The remaining amount of other expense (income) for the three and nine months ended September 30, 2021 is attributable to currency rate fluctuations.

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(4)If the items identified in a footnote 2 as not previously included in adjusted EBITDA for the periods ended March 31, 2022 and June 30, 2022 had been included in adjusted EBITDA for those periods, adjusted EBITDA losses would have been $15.2 million and $20.1 million for the three months ended March 31, 2022 and the six months ended June 30, 2022, respectively.

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

•    although amortization is a non-cash charge, the assets being amortized may have to be replaced in the future, and adjusted operating income (loss) does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

•    adjusted operating income (loss) does not consider the impact of acquisition related costs;

•    adjusted operating income (loss) does not consider the impact of restructuring costs;

•    adjusted operating income (loss) does not consider the impact of other costs;

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

Because of these limitations, you should consider adjusted operating income (loss) alongside other financial performance measures, including various pre-tax GAAP loss and our other GAAP results. The following table presents a reconciliation of adjusted operating income (loss) for each of the periods indicated:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Reconciliation of Adjusted Operating Income (Loss)	2022		2021		2022			2021
	(In thousands)
Loss before provision for income taxes	$	(42,999)	$	(30,269)	$	(182,753)		$	(72,836)
Amortization of purchased intangibles and finance leases	5,731		1,831		16,530			4,939
Stock-based compensation	31,940		18,269		100,323			47,967
Restructuring costs (1)	7,111		44		17,949			3,269
Other litigation, consulting and other employee costs (2)	4,772		602		12,643			4,784
Contingent earn-out adjustments	(8,568)		—		(8,568)			132
Acquisition costs	1,002		—		3,124			—
Interest (income) expense, net	(401)		9,442		1,713			27,852
Other expense (income), net (3)	3,454		48		6,660			(3,002)
Adjusted operating income (loss)	$	2,042	$	(33)	$	(32,379)	(4)	$	13,105

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(1)Includes severance costs and other compensation related costs of $7.1 million for the three months ended September 30, 2022. Includes severance costs and other compensation related costs of $17.6 million and lease restructuring costs of $0.3 million for the nine months ended September 30, 2022 Includes lease restructuring costs of $0.6 million and severance costs and other compensation related costs of $2.7 million for the nine months ended September 30, 2021.

(2)Includes consulting costs of $0.3 million, litigation costs of $3.3 million and accrued expenses and fees of $1.2 million for the three months ended September 30, 2022. Includes litigation costs of $0.4 million, consulting costs of $0.7 million and a reversal of the reserve for sales and use tax liability of $0.5 million for the three months ended September 30, 2021. Includes litigation costs of $6.4 million, employee benefit costs of $1.8 million, consulting costs of $1.0 million, and an increase to the reserve for sales and use tax liability of $0.3 million for the nine months ended September 30, 2022, along with $1.0 million of additional litigation costs and $2.1 million of employee-related costs not previously included in adjusted operating income (loss) for the periods ended March 31, 2022 and June 30, 2022. Includes litigation costs of $3.2 million, employee benefit costs of $0.6 million, consulting costs of $1.3 million and an increase to the reserve for sales and use tax liability of $0.3 million for the nine months ended September 30, 2021. The treatment of litigation costs in the table above is now consistent with treatment of litigation costs in periods prior to 2022.

(3)Includes $0.2 million of other income related to the settlement of leases, offset by $2.5 million of costs related to elimination entries for our Equity Method Investment, for the three and nine months ended September 30, 2022. The remaining amount of other expense (income) for the three and nine months ended September 30, 2022 is attributable to currency rate fluctuations. Includes $0.2 million and $3.5 million of other income related to the settlement of leases for the three and nine months ended September 30, 2021, respectively. The remaining amount of other expense (income) for the three and nine months ended September 30, 2021 is attributable to currency rate fluctuations.

(4)If the items identified in a footnote 2 as not previously included in adjusted operating income (loss) for the periods ended March 31, 2022 and June 30, 2022 had been included in adjusted operating income (loss) for those periods, adjusted operating losses would have been $22.4 million and $34.4 million for the three months ended March 31, 2022 and the six months ended June 30, 2022, respectively.

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Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that management believes are reasonable based upon the information available. We base these estimates on our historical experience, future expectations and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments that may not be readily apparent from other sources. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.

We believe that the assumptions and estimates associated with revenue recognition, depreciation, stock-based compensation, accounts receivable, the valuation of goodwill and intangible assets, income taxes and legal contingencies have the greatest potential impact on our consolidated financial statements. We evaluate these estimates on an ongoing basis. Actual results could differ from those estimates under different assumptions or conditions, and any differences could be material. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating the reported consolidated financial results include the following:

Revenue Recognition

The majority of our revenue is generated from monthly service revenues, which is inclusive of our platform usage pricing model, and related professional services from the sale of our services. Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. A large proportion of our revenue from new customers comes from large corporations. These companies typically have more significant implementation requirements and more stringent data security standards. Such customers also have more sophisticated data analysis and performance reporting requirements, and are likely to engage our professional services organization to provide such analysis and reporting on a recurring basis.

We determine revenue recognition through the following steps:

•identification of the contract, or contracts, with a customer;

•identification of the performance obligations in the contract;

•determination of the transaction price;

•allocation of the transaction price to the performance obligations in the contract; and

•recognition of revenue when, or as, we satisfy a performance obligation.

Total revenue of $129.6 million and $118.3 million was recognized for the three months ended September 30, 2022 and 2021, respectively, and $392.3 million and $345.8 million during the nine months ended September 30, 2022 and 2021, respectively.

We defer all incremental commission costs to obtain the contract (contract acquisition costs). The contract acquisition costs consist of prepaid sales commissions and have balances as of September 30, 2022 and December 31, 2021 of $39.9 million and $40.7 million, respectively. We amortize these costs over the related period of benefit using the expected life of the customer contract, which we determine to be three to five years, consistent with the transfer to the customer of the services to which the asset relates. We classify contract acquisition costs as long-term unless they have an original amortization period of one year or less.

Hosted Services - Business Revenue

Hosted services - Business revenue is reported at the amount that reflects the ultimate consideration expected to be received and primarily consist of fees that provide customers access to the Conversational Cloud. We have determined such access represents a stand-ready service provided continually throughout the contract term. As such, control and satisfaction of this stand-ready performance obligation is deemed to occur over time. We recognize this revenue over time on a ratable basis over the contract term, beginning on the date that access to the Conversational Cloud platform is made available to the customer. The passage of time is deemed to be the most faithful depiction of the transfer of control of the services as the customer simultaneously receives and consumes the benefit provided by our performance. Subscription contracts are

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generally one year or longer in length, billed monthly, quarterly or annually in advance. Additionally, for certain of our larger customers, we may provide call center labor through an arrangement with one or more of several qualified vendors. For most of these customers, we pass the fee we incur with the labor provider and its fee for the hosted services through to our customers in the form of a fixed fee for each order placed via our online engagement solutions. For these Gainshare arrangements, we act as a principal in a transaction if we control the specified goods or services before they are transferred to the customer.

Revenue attributable to our monthly hosted Business services accounted for 69% and 79% of total revenue for the three months ended September 30, 2022 and 2021, respectively, and 74% and 79% for the nine months ended September 30, 2022 and 2021, respectively.

Professional Services Revenue

Professional Services revenue primarily consists of fees for deployment and optimization services, as well as training delivered on an on-demand basis which is deemed to represent a distinct stand-ready performance obligation and is recognized at a point in time. Professional Services revenue is reported at the amount that reflects the ultimate consideration we expect to receive in exchange for such services. Control for the majority of our Professional Services contracts passes over time to the customer and is recognized ratably over the contracted period, as the passage of time is deemed to be the most faithful depiction of the transfer of control. For certain deployment services, which are not deemed to represent a distinct performance obligation, revenue will be recognized in the same manner as the fee for access to the Conversational Cloud platform, and as such will be recognized on a straight-line basis over the contract term. For services billed on a fixed price basis, revenue is recognized over time based on the proportion performed using time and materials as the measure of progress toward complete satisfaction of the performance obligation. Our Professional Services contracts are generally one year or longer in length, billed monthly, quarterly or annually in advance. There is no significant variable consideration related to these arrangements.

Revenue attributable to Professional Services accounted for 24% and 13% of total revenue for the three months ended September 30, 2022 and 2021, respectively, and 19% and 13% for the nine months ended September 30, 2022 and 2021, respectively.

Hosted Services - Consumer Revenue

For revenue from our Consumer segment generated from online transactions between Experts and Users, revenue is recognized at an amount net of Expert fees primarily because the Expert is the primary obligor. We do not act as a principal in a transaction since we do not control the specified goods or services before they are transferred to the customer. Additionally, we perform as an agent without any risk of loss for collection, and we are not involved in selecting the Expert or establishing the Expert’s fee. We collect a fee from the consumer and retain a portion of the fee, and then remit the balance to the Expert. Revenue from these transactions is recognized at the point in time when the transaction is complete and no significant performance obligations remain.

Revenue from our Consumer segment accounted for 7% and 8% of total revenue for the three months ended September 30, 2022 and 2021, respectively, and 7% and 8% for the nine months ended September 30, 2022 and 2021, respectively.

Remaining Performance Obligation

As of September 30, 2022, the aggregate amount of the total transaction price allocated in contracts with original duration of one year or greater to the remaining performance obligations was $430.5 million. Approximately 88% of our remaining performance obligations is expected to be recognized during the next 24 months, with the balance recognized thereafter. The aggregate balance of unsatisfied performance obligations represents contracted revenue that has not yet been recognized, and does not include contract amounts that are cancellable by the customer, amounts associated with optional renewal periods, and any amounts related to performance obligations, which are billed and recognized as they are delivered. We have elected the optional exemption, which allows for the exclusion of the amounts for remaining performance obligations that are part of contracts with an original expected duration of less than one year. Such remaining performance obligations represent unsatisfied or partially unsatisfied performance obligations pursuant to ASC 606, “Revenue from Contracts with Customers.”

Contracts with Multiple Performance Obligations

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Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. We determine the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the cloud applications sold, and the number and types of users within our contracts.

Deferred Revenues

We record deferred revenues when cash payments are received or due in advance of our performance. The increase of $4.6 million in deferred revenue balance as of September 30, 2022 from the deferred revenue balance of $98.9 million as of December 31, 2021 is primarily driven by cash payments received or due in advance of our performance obligations, partially offset by $67.2 million in revenues recognized that were included in the deferred revenue balance as of December 31, 2021.

Stock-Based Compensation

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

Our forfeiture rate assumptions, which estimate the share-based awards that will ultimately vest, requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period of change and could be materially different from share-based compensation expense recorded in prior periods.

For the nine months ended September 30, 2022 and 2021, we accrued approximately $11.9 million and $15.5 million in cash awards, respectively, to be settled in shares of our stock and recorded a corresponding expense, which is included as a component of stock-based compensation expense in the accompanying condensed consolidated financial statements respectively. For the three months ended September 30, 2022, there was no accrued liability for cash awards, and we accrued approximately $5.1 million in cash awards for the three months ended September 30, 2021.

As of September 30, 2022, there was approximately $24.8 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of approximately 2.6 years.

As of September 30, 2022, there was approximately $130.1 million of total unrecognized compensation cost related to nonvested restricted stock units. That cost is expected to be recognized over the remaining weighted average period of approximately 2.8 years.

Accounts Receivable

We perform ongoing credit evaluations of our customers’ financial condition (except for customers who purchase the LivePerson services by credit card via Internet download) and have established an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends and other information that we believe to be reasonable, although they may change in the future. If there is a deterioration of a customer’s credit worthiness or actual write-offs are higher than our historical experience, our estimates of recoverability for these receivables could be adversely affected. Although our large number of customers limits our concentration of credit risk, if we experience a significant write-off from one of our large customers, it could have a material adverse impact on our consolidated financial statements.

No single customer accounted for 10% or more of our total revenue for the three and nine months ended September 30, 2022 and 2021. One customer exceeded 10% of our total accounts receivable as of September 30, 2022, while no single customer accounted for 10% or more of our total accounts receivable as of December 31, 2021. During the nine months ended September 30, 2022, we increased our allowance for doubtful accounts from $6.3 million as of December 31, 2021 to approximately $8.5 million. A large proportion of receivables are due from larger corporate customers that typically have longer payment cycles. Accounts receivable is presented net of an allowance for doubtful accounts and sales reserve of $8.5

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million and $4.0 million as of September 30, 2022, respectively, and $6.3 million and $4.1 million as of December 31, 2021, respectively.

An allowance for doubtful accounts is established for losses expected to be incurred on accounts receivable balances. Judgment is required in the estimation of the allowance and we evaluate the collectability of our accounts receivable based on a combination of factors. If we become aware of a customer’s inability to meet its financial obligations, a specific allowance is recorded to reduce the net receivable to the amount reasonably believed to be collectible from the customer. For all other customers, we use an aging schedule and recognize allowances for doubtful accounts based on the creditworthiness of the debtor, the age and status of outstanding receivables, the current business environment and our historical collection experience adjusted for current expectations for the customer or industry. Accounts receivable are written off against the allowance for uncollectible accounts when we determine amounts are no longer collectible.

Goodwill

Goodwill represents the excess of the aggregate purchase price over the fair value of net identifiable assets acquired in a business combination. Goodwill is not amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We have determined that we operate as three reporting units and have selected September 30 as the date to perform our annual impairment test. In the valuation of goodwill, management must make assumptions regarding estimated future cash flows to be derived from our business. If these estimates or their related assumptions change in the future, we may be required to record impairment for these assets.

We have the option to first perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. However, we may elect to bypass the qualitative assessment and proceed directly to the quantitative impairment tests. The impairment test involves comparing the fair value of the reporting unit to its carrying value, including goodwill. A goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value. The impairment is limited to the carrying amount of goodwill.

No goodwill impairment charges have been recorded for any period presented.

Impairment of Long-Lived Assets

The carrying amounts of our long-lived assets, including property and equipment, lease right of use assets, capitalized internal-use software, costs to obtain customer contracts, and acquired intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful lives are shorter than originally estimated. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to future undiscounted net cash flows the asset is expected to generate over its remaining life. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. If the useful life is shorter than originally estimated, we amortize the remaining carrying value over the new shorter useful life. 

Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are expected to become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

The Company includes interest accrued on the underpayment of income taxes in interest expense and penalties, if any, related to unrecognized tax benefits in general and administrative expenses. The Company recorded a valuation allowance against its U.S. and Germany deferred tax assets as it considered its cumulative loss in recent years as a significant piece of negative evidence. Since valuation allowances are evaluated on a jurisdiction by jurisdiction basis, we believe that the deferred tax assets related to LivePerson Australia Holdings Pty. Ltd., LivePerson (UK) Limited, Kasamba Inc., LivePerson Japan and LivePerson Limited (Israel) are more likely than not to be realized as these jurisdictions have positive cumulative pre-tax book

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income after adjusting for permanent and one-time items. During the year ended December 31, 2021, there was an increase in the valuation recorded of $51.7 million.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA establishes a 15% corporate minimum tax effective for taxable years beginning after December 31, 2022, and imposes a 1% excise tax on the repurchase after December 31, 2022 of stock by publicly traded U.S. corporations. We currently do not expect the tax-related provisions of the IRA to have a material impact on our financial results.

Legal Contingencies

We are subject to legal proceedings and litigation arising in the ordinary course of business. Periodically, we evaluate the status of each legal matter and assess our potential financial exposure. If the potential loss from any legal proceeding or litigation is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Significant judgment is required to determine the probability of a loss and whether the amount of the loss is reasonably estimable. The outcome of any proceeding is not determinable in advance. As a result, the assessment of a potential liability and the amount of accruals recorded are based only on the information available at the time. As additional information becomes available, we reassess the potential liability related to the legal proceeding or litigation, and may revise our estimates. Any revisions could have a material effect on our results of operations. See Note 15 – Legal Matters in the Notes to the Condensed Consolidated Financial Statements for additional information on our legal proceedings and litigation.

Recently Issued Accounting Standards

See Note 1 – Description of Business and Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements for a full description of recently issued accounting standards.

Recently Adopted Accounting Pronouncements

See Note 1 – Description of Business and Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements for a full description of recently adopted accounting pronouncements.

Results of Operations

We are organized into two operating segments for purposes of making operating decisions and assessing performance. The Business segment enables brands to leverage the Conversational Cloud’s sophisticated intelligence engine to connect with consumers through an integrated suite of mobile and online business messaging technologies. The Consumer segment facilitates online transactions between Experts and Users seeking information and knowledge for a fee via mobile and online messaging.

Comparison of the Three and Nine Months Ended September 30, 2022 and September 30, 2021

Revenue

The following tables set forth our results of operations for the periods presented and as a percentage of our revenues for those periods. The period-to-period comparison of financial results is not necessarily indicative of future results.    

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022		2021		% Change		2022		2021		% Change
	(Dollars in thousands)
Revenue by Segment:
Business	$	120,101	$	109,204	10	%	$	364,612	$	317,879	15	%
Consumer	9,460		9,123		4	%	27,711		27,944		(1)	%
Total revenue	$	129,561	$	118,327	10	%	$	392,323	$	345,823	13	%

Business revenue increased by 10% to $120.1 million and by 15% to $364.6 million for the three and nine months ended September 30, 2022, respectively, from $109.2 million and $317.9 million, respectively, for the comparable periods in 2021. The increase in Business revenue is primarily driven by increases in professional services of $14.6 million and $28.0 million during the three and nine months ended September 30, 2022, respectively. Hosted services decreased by $3.7 million and

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increased by $18.7 million for the three and nine months ended September 30, 2022, respectively, from $93.2 million and $272.0 million for the comparable periods in 2021. Included in hosted services is a net increase in revenue that is variable based on interaction and usage of approximately $11.5 million and $12.5 million during the three and nine months ended September 30, 2022, respectively.

The total increase in Business revenue was primarily due to expansions from existing customers and increased volume from new customers as LivePerson generated greater demand for its Conversational Commerce software. LivePerson is powering Conversational AI, automation and messaging strategies across a growing number of use cases from care and sales, to marketing, social, conversational advertising and brick and mortar. As adoption increases, we are seeing higher revenue per customer. Our average annual revenue per enterprise and mid-market customer increased approximately 18% year-over-year to $675,000 for the trailing twelve months ended September 30, 2022, as compared to $570,000 for the trailing twelve months ended September 30, 2021. Revenue retention for our enterprise and mid-market customers on the Conversational Cloud was just below our target range of 105% to 115% for the third quarter of 2022 and comparable period in 2021. However, we are seeing sequential revenue growth as result of sales cycles driven by current macro-environmental factors.

Consumer revenue increased by 4% to $9.5 million and decreased by 1% to $27.7 million for the three and nine months ended September 30, 2022, respectively, from $9.1 million and $27.9 million for the comparable periods in 2021. This decrease was driven by slightly lower demand by consumers to engage with experts and advisors through conversational messaging channels.

Cost of Revenue - Business

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

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2022			2021			% Change		2022			2021			% Change
	(Dollars in thousands)
Cost of revenue - business	$	42,392		$	37,057		14	%	$	134,229		$	106,932		26	%
Percentage of total revenue	33		%	31		%			34		%	31		%
Headcount (at period end)	346			241			44	%	346			241			44	%

Cost of revenue - business increased by 14% to $42.4 million for the three months ended September 30, 2022 from $37.1 million for the comparable period in 2021. This increase in expense is primarily attributable to an increase in amortization expense of approximately $3.5 million, an increase in contingent consideration of approximately $2.3 million, an increase salary and related employee expenses of approximately $1.8 million, an increase in software expenses of approximately $0.2 million, partially offset by a decrease in business services and outsourced contracting of approximately $2.4 million.

Cost of revenue - business increased by 26% to $134.2 million for the nine months ended September 30, 2022 from $106.9 million for the comparable period in 2021. This increase in expense is primarily attributable to an increase in salary and related employee expenses of approximately $12.0 million, an increase in amortization expense of approximately $10.1 million, an increase in software expenses of approximately $4.3 million, and an increase in business services and outsourced contracting of $0.9 million.

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Cost of Revenue - Consumer

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

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2022			2021			% Change		2022			2021			% Change
	(Dollars in thousands)
Cost of revenue - consumer	$	1,289		$	1,738		(26)	%	$	4,068		$	5,445		(25)	%
Percentage of total revenue	1		%	1		%			1		%	2		%
Headcount (at period end)	15			18			(17)	%	15			18			(17)	%

Cost of revenue - consumer decreased by 26% to $1.3 million for the three months ended September 30, 2022 from $1.7 million for the comparable period in 2021. This decrease in expense is primarily related to decreases in business services and outsourcing, and software expenses.

Cost of revenue - consumer decreased by 25% to $4.1 million for the nine months ended September 30, 2022 from $5.4 million for the comparable period in 2021. This decrease in expense is primarily related to decreases in business services and outsourced contracting, salary and employee related expenses.

Sales and Marketing - Business

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

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2022			2021			% Change		2022			2021			% Change
	(Dollars in thousands)
Sales and marketing - business	$	42,826		$	34,640		24	%	$	148,370		$	96,758		53	%
Percentage of total revenue	33		%	29		%			38		%	28		%
Headcount (at period end)	558			339			65	%	558			339			65	%

Sales and marketing - business expenses increased by 24% to $42.8 million for the three months ended September 30, 2022 from $34.6 million for the comparable period in 2021. This increase was primarily attributable to an increase in salary and related employee expenses of approximately $9.2 million, an increase in software expenses of approximately $1.5 million, partially offset by a decrease in marketing expenses of approximately $3.1 million.

Sales and marketing - business expenses increased by 53% to $148.4 million for the nine months ended September 30, 2022 from $96.8 million for the comparable period in 2021. This increase was primarily attributable to an increase in salary and related employee expenses of approximately $41.3 million, an increase in software expenses of $4.8 million, an increase in marketing expenses of approximately $3.4 million, and an increase in business services and outsourced contracting of $2.2 million.

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Sales and Marketing - Consumer

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

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2022			2021			% Change		2022			2021			% Change
	(Dollars in thousands)
Sales and marketing - consumer	$	6,622		$	6,212		7	%	$	19,193		$	19,669		(2)	%
Percentage of total revenue	5		%	5		%			5		%	6		%
Headcount (at period end)	15			18			(17)	%	15			18			(17)	%

Sales and marketing - consumer expenses increased by 7% to $6.6 million for the three months ended September 30, 2022 from $6.2 million for the comparable period in 2021. This increase is primarily attributable to an increase in marketing expenses of approximately $0.4 million.

Sales and marketing - consumer expenses decreased by 2% to $19.2 million for the nine months ended September 30, 2022 from $19.7 million for the comparable period in 2021. This decrease is primarily attributable to a decrease in outsourced subcontracting of approximately $0.5 million.

General and Administrative

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

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2022			2021			% Change		2022			2021			% Change
	(Dollars in thousands)
General and administrative	$	32,171		$	17,193		87	%	$	92,152		$	47,784		93	%
Percentage of total revenue	25		%	15		%			23		%	14		%
Headcount (at period end)	169			137			23	%	169			137			23	%

General and administrative expenses increased by 87% to $32.2 million for the three months ended September 30, 2022 from $17.2 million for the comparable period in 2021. This increase is primarily attributable to an increase in contingent compensation of approximately $10.3 million, an increase in legal services of approximately $4.4 million and an increase in taxes of approximately $0.2 million.

General and administrative expenses increased by 93% to $92.2 million for the nine months ended September 30, 2022 from $47.8 million for the comparable period in 2021. This increase is primarily attributable to an increase in contingent consideration of approximately $30.5 million, an increase in legal services of approximately $9.2 million and an increase in depreciation and amortization expense of approximately $4.6 million.

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Product Development

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

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2022			2021			% Change		2022			2021			% Change
	(Dollars in thousands)
Product development	$	44,744		$	41,734		7	%	$	156,568		$	112,715		39	%
Percentage of total revenue	35		%	35		%			40		%	33		%
Headcount (at period end)	552			574			(4)	%	552			574			(4)	%

Product development costs increased by 7% to $44.7 million for the three months ended September 30, 2022 from $41.7 million for the comparable period in 2021. This increase is primarily related to increases in salary and employee related expenses of approximately $2.1 million, an increase in software expenses of approximately $1.1 million, partially offset by a decrease in business services and outsourcing subcontracted labor of approximately $0.4 million. We also made investments in public cloud migration, and in enhancing and expanding new features of the Conversational Cloud. Further, we invested in hiring more data scientists and machine learning engineers to focus on Conversational AI.

Product development costs increased by 39% to $156.6 million for the nine months ended September 30, 2022 from $112.7 million for the comparable period in 2021. This increase is primarily related to an increase in salary and employee related expenses of approximately $30.4 million, an increase in business services and outsourcing subcontracted labor of approximately $7.6 million, an increase in software expenses of approximately $4.8 million, and an increase in depreciation expenses of approximately $1.1 million.

We continue to invest in new product development efforts to expand the capability of the Conversational Cloud. Upon completion, the project costs will be depreciated over five years. For the three and nine months ended September 30, 2022, $9.3 million and $28.4 million was capitalized, respectively, compared to $9.2 million and $26.6 million, respectively, for the comparable periods in 2021.

Restructuring Costs

Restructuring costs consist of re-prioritizing and reallocating resources to focus on areas believed to show high growth potential.

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2022			2021			% Change		2022			2021			% Change
	(Dollars in thousands)
Restructuring costs	$	7,111		$	44		16,061	%	$	17,949		$	3,269		449	%
Percentage of total revenue	5		%	—		%			5		%	1		%

The restructuring cost for the nine months ended September 30, 2022 was driven by a restructuring initiative commenced during the second quarter of 2022. The purpose of this restructuring plan was to realign our cost structure to better reflect significant product and business model innovation and changes over the past year due to acquisitions and other factors. As part of the restructuring initiative, we reoriented our global product and engineering organization for greater efficiency and focus, and reallocated some spending to increase our investment in customer success and go-to-market initiatives. We believe these initiatives will better align resources to provide further operating flexibility and position the business for long-term success.

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Amortization of Purchased Intangibles

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2022			2021			% Change		2022			2021			% Change
	(Dollars in thousands)
Amortization of purchased intangibles	$	920		$	488		89	%	$	2,742		$	1,237		122	%
Percentage of total revenues	1		%	—		%			1		%	—		%

Amortization expenses for purchased intangibles increased by 89% to $0.9 million and by 122% to $2.7 million for the three and nine months ended September 30, 2022, respectively, from $0.5 million and $1.2 million for the respective comparable periods in 2021, primarily driven by additional amortization of intangibles obtained during acquisitions of e-bot7 in July 2021, Tenfold and VoiceBase in October 2021 and WildHealth in February 2022.

Additional amortization expenses in the amount of $4.8 million and $13.8 million for the three and nine months ended September 30, 2022, respectively, and $1.3 million and $3.7 million for the three and nine months ended September 30, 2021, respectively, is included in cost of revenue.

Other income (expense), net

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022		2021		% Change		2022		2021		% Change
	(Dollars in thousands)
Interest income (expense), net	$	401	$	(9,442)	104	%	$	(1,713)	$	(27,852)	94	%
Other income (expense), net	5,114		(48)		10,754	%	1,908		3,002		(36)	%
Other income (expense), net	$	5,515	$	(9,490)	158	%	$	195	$	(24,850)	101	%

Other income (expense), net decreased by 158% to $5.5 million for the three months ended September 30, 2022 from $9.5 million for the comparable period in 2021 primarily due to the adoption of ASU 2020-06 and the elimination of the debt discount that was previously being amortized to interest expense over the contractual term of the Notes, partially offset by other expense associated with the Company’s equity method investment.

Other income (expense), net decreased by 101% to $0.2 million for the nine months ended September 30, 2022 from $24.9 million for the comparable period in 2021 primarily due to the adoption of ASU 2020-06 and the elimination of the debt discount that was previously being amortized to interest expense over the contractual term of the Notes, partially offset by other expense associated with the Company’s equity method investment.

Provision for Income Taxes

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022		2021		% Change		2022		2021		% Change
	(Dollars in thousands)
Provision for income taxes	$	249	$	2,538	(90)	%	$	1,270	$	2,285	(44)	%

We had a tax provision of $0.2 million and $1.3 million for the three and nine months ended September 30, 2022, respectively. Provision for income taxes was $2.5 million and $2.3 million for the three and nine months ended September 30, 2021, respectively. Our consolidated effective tax rate was impacted by the statutory income tax rates applicable to each of the jurisdictions in which we operate.    

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For the three months ended September 30, 2022, the Company recorded a tax provision of $0.2 million. This amount consists mainly of a tax provision of $0.1 million on operating earnings for the period coupled with a stock compensation tax deficiency of $0.1 million related to stock compensation arrangements for LivePerson, LivePerson (UK) Limited and LivePerson Limited (Israel).

For the nine months ended September 30, 2022, the Company recorded a tax provision of $1.3 million. This amount consists of a tax provision of $2.7 million on operating earnings for the period coupled with a stock compensation tax deficiency of $0.2 million related to stock compensation arrangements for LivePerson, LivePerson (UK) Limited and LivePerson Limited (Israel), offset by a tax benefit of $1.6 million related to the release of a valuation allowance in conjunction with the WildHealth transaction.

Net Loss

We had a net loss of $43.2 million and $184.0 million for the three and nine months ended September 30, 2022, respectively, compared to a net loss of $32.8 million and $75.1 million for the three and nine months ended September 30, 2021, respectively.

Liquidity and Capital Resources

	Nine Months Ended
	September 30,
	2022		2021
	(In thousands)
Consolidated Statements of Cash Flows Data:
Net cash (used in) provided by operating activities	$	(79,471)	$	35,642
Net cash used in investing activities	(44,057)		(60,721)
Net cash (used in) provided by financing activities	(1,547)		10,521

As of September 30, 2022, we had approximately $393.7 million in cash, cash equivalents, and restricted cash, a decrease of approximately $129.8 million from December 31, 2021. The decrease is primarily attributable to non-cash operating expenses such as stock-based compensation, depreciation, amortization of purchased intangibles and finance leases as well as investing activities such as the acquisition costs of WildHealth and capital expenditures.

Net cash used in operating activities was $79.5 million for the nine months ended September 30, 2022. Our net loss of $184.0 million includes the effect of non-cash expenses related to stock-based compensation of $100.3 million, depreciation of $21.4 million, amortization of purchased intangibles and finance leases of $16.5 million as well as an increase in deferred revenue of $7.5 million. This was further driven by an increase in accounts receivable of $13.9 million, an increase in prepaid expenses of $13.5 million, and a decrease in accrued expenses of $12.2 million. Net cash provided by operating activities was $35.6 million for the nine months ended September 30, 2021.

Our net loss of $75.1 million for the nine months ended September 30, 2021 includes the effect of non-cash expenses related to stock-based compensation of $48.0 million, depreciation of $20.5 million, an increase in deferred revenue of $14.9 million and an increase in accrued expenses of $22.2 million. This was partially offset by increases in accounts receivable of $5.8 million and prepaid expenses of $10.3 million.

Net cash used in investing activities was $44.1 million for the nine months ended September 30, 2022 and was primarily driven by the acquisition costs for the purchase of WildHealth, the purchase of fixed assets for our co-location facilities, and capitalization of internally developed software. Net cash used in investing activities was $60.7 million for the nine months ended September 30, 2021 and consisted primarily of the purchase of fixed assets for our co-location facilities and capitalization of internally developed software.

Net cash used in financing activities was $1.5 million for the nine months ended September 30, 2022, consisting of principal payments related to finance leases of $2.8 million, partially offset by proceeds from issuance of common stock in connection with the exercise of stock options by employees of $1.2 million. Net cash provided by financing activities was $10.5 million for the nine months ended September 30, 2021 and consisted primarily of proceeds from issuance of common stock in connection with the exercise of stock options by employees.

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We have incurred significant expenses to develop our technology and services, to hire employees in our customer service, sales, marketing and administration departments, and for the amortization of purchased intangible assets, as well as stock-based compensation costs. Historically, we have incurred net losses and negative cash flows for various quarterly and annual periods since our inception, including during numerous quarters and annual periods in the past several years. As of September 30, 2022, we had an accumulated deficit of approximately $650.6 million.

Our principal sources of liquidity are the net proceeds from the issuance of our convertible senior notes, after deducting purchaser discounts and debt issuance costs paid by us, issuance of common stock in connection with the exercise of options, and payments received from customers using our products. We anticipate that our current cash and cash equivalents will be sufficient to satisfy our working capital and capital requirements for at least the next 12 months. However, we cannot assure you that we will not require additional funds prior to such time, and we would then seek to sell additional equity or debt securities through public financings, or seek alternative sources of financing. We cannot assure you that additional funding will be available on favorable terms, when needed, if at all. If we are unable to obtain any necessary additional financing, we may be required to further reduce the scope of our planned sales and marketing and product development efforts, which could materially adversely affect our financial condition and operating results. In addition, we may require additional funds in order to fund more rapid expansion, to develop new or enhanced services or products or to invest in or acquire complementary businesses, technologies, services or products.

The Company may from time to time, subject to board authorization and any applicable restrictions under contracts to which it may be or become a party, depending upon market conditions and the Company’s financing needs, use available funds to refinance or repurchase its outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms the Company deems appropriate (which, in the case of debt securities, may be below par) and subject to the Company’s cash requirements for other purposes and other factors management deems relevant.

We do not engage in off-balance sheet financing arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Risks

Our Israeli operations have currency rate fluctuation risk associated with the exchange rate movement of the U.S. dollar against the NIS. During the three and nine months ended September 30, 2022, the U.S. dollar appreciated on average by approximately 6% and 2%, respectively, against the NIS as compared to the three and nine months ended September 30, 2021. During the three and nine months ended September 30, 2022, expenses generated by our Israeli operations totaled approximately $13.8 million and $46.2 million, respectively. We actively monitor the movement of the U.S. dollar against the NIS, Pound Sterling, Euro, Australian dollar, and Japanese Yen and have considered the use of financial instruments, including but not limited to derivative financial instruments, which could mitigate such risk. If we determine that our risk of exposure materially exceeds the potential cost of derivative financial instruments, we may in the future enter in to these types of arrangements. The functional currency of our wholly-owned Israeli subsidiaries, LivePerson Limited (Israel) and Kasamba Inc., is the U.S. dollar; the functional currency of our operations in the United Kingdom is the Pound Sterling; the functional currency of our operations in the Netherlands, Germany, France, and Italy is the Euro; the functional currency of our operations in Australia is the Australian Dollar; and the functional currency of our operations in Japan is the Japanese Yen.

Collection Risks

Our accounts receivable are subject, in the normal course of business, to collection risks. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks. During the nine months ended September 30, 2022, our allowance for doubtful accounts increased by $2.2 million to approximately $8.5 million. During the nine months ended September 30, 2021, we increased our allowance for doubtful accounts by $0.3 million to approximately $5.6 million. A large proportion of our receivables are due from larger corporate customers that typically have longer payment cycles. We base our allowance for doubtful accounts on specifically identified credit risks of customers, historical trends and other information that we believe to be reasonable. Receivables are written-off and charged against the applicable recorded allowance when we have exhausted collection efforts without success. We adjust our allowance for doubtful accounts when accounts previously reserved have been collected.

An allowance for doubtful accounts is established for losses expected to be incurred on accounts receivable balances. Judgment is required in the estimation of the allowance and we evaluate the collectability of our accounts receivable and

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contract assets based on a combination of factors. If we become aware of a customer’s inability to meet its financial obligations, a specific allowance is recorded to reduce the net receivable to the amount reasonably believed to be collectible from the customer. For all other customers, we use an aging schedule and recognize allowances for doubtful accounts based on the creditworthiness of the debtor, the age and status of outstanding receivables, the current business environment and our historical collection experience adjusted for current expectations for the customer or industry. Accounts receivable are written off against the allowance for uncollectible accounts when we determine amounts are no longer collectible.

Interest Rate Risk

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

Inflation Risk

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

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, 2022. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2022 to ensure that the information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended September 30, 2022 identified in connection with the evaluation thereof by our management, including the Chief Executive Officer and Chief Financial Officer, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations of the Effectiveness of Internal Control

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

Part II. Other Information

Item 1. Legal Proceedings

The Company filed an intellectual property suit against [24]7 Customer, Inc. (“[24]7”) in the Southern District of New York on March 6, 2014 seeking damages on the grounds that [24]7 reverse engineered and misappropriated the Company’s technology to develop competing products and misused the Company’s business information. On June 22, 2015, [24]7 filed suit against the Company in the Northern District of California alleging patent infringement. On December 7, 2015, [24]7 filed a second patent infringement suit against the Company, also in the Northern District of California. On March 16, 2017, the New York case was voluntarily transferred and consolidated with the two California cases in the Northern District of California (the “Court”) for all pre-trial purposes. Rulings by both the Court and the United States Patent and Trademark Office in the Company’s favor have invalidated the majority of [24]7 patents that were asserted in the patent cases.

The Company believes the remaining claims filed by [24]7 are entirely without merit and intends to defend them vigorously. Trial for the Company’s intellectual property and other claims asserted against [24]7 related to three of the customers at issue occurred on May 24, 2021 and the jury awarded approximately $30.3 million in favor of the Company, including approximately $6.7 million in compensatory damages and approximately $23.6 million in punitive damages. After the jury reached its verdict, additional post-trial motions were filed by [24]7 and LivePerson, including [24]7 asking the Court to order a new trial, overturn the jury’s verdict, or reduce the amount of punitive damages the jury awarded, and LivePerson requested interest on the judgment. The Company and [24]7 also reached agreement on the terms of a permanent injunction, and that additional costs are owed to the Company in the amount of $0.4 million, which the Court has entered. On July 28, 2022, the Court denied [24]7’s post-trial motions and granted LivePerson’s motion for interest, awarding approximately an additional $4.3 million. On August 26, 2022, [24]7 elected to appeal these matters. Accordingly, no amounts for the judgment have been reflected in the Company’s financial statements. Trial for [24]7’s patent infringement claims has been set for late October 2023 and trial for the Company’s remaining trade secret claims asserted against [24]7 has been set for early March 2024.

From time to time, the Company is involved in or subject to legal, administrative and regulatory proceedings, claims, demands, and investigations arising in the ordinary course of business, including direct claims brought by or against the Company with respect to intellectual property, contracts, employment and other matters, as well as claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

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Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In addition, in the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosure related to such matter as appropriate and in compliance with ASC 450. The accruals or estimates, if any, resulting from the foregoing analysis, are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, the Company will, as applicable, adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made. From time to time, third parties assert claims against the Company regarding intellectual property rights, privacy issues, and other matters arising in the ordinary course of business.

Although the Company cannot be certain of the outcome of any litigation or the disposition of any claims, nor the amount of damages and exposure, if any, that the Company could incur, the Company currently believes that the final disposition of all existing matters will not have a material adverse effect on results of operations, financial condition, or cash flows.

In addition, in the ordinary course of business, the Company is also subject to periodic threats of lawsuits, investigations and claims. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed on February 28, 2022, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. There have been no material changes to the risk factors described in our most recent Annual Report on Form 10-K.

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

Unregistered Sales of Equity Securities

There were no unregistered sales of equity securities by the issuer during the three months ended September 30, 2022.

Purchase of Equity Securities by the Issuer

There were no repurchases of equity securities by the issuer during the three months ended September 30, 2022.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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ITEM 6. EXHIBITS

10.1	*	Amended and Restated Offer Letter between LivePerson and John D. Collins, dated as of August 9, 2022
31.1	*	Certification by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	*	Certification by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	**	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	**	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	*	Inline XBRL Instance Document -- The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	*	Inline XBRL Taxonomy Extension Schema Document
101.CAL	*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	*	Cover Page Interactive Data File (formatted as Inline XBRL)

*    Filed herewith

**    Furnished herewith

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SIGNATURES

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

		LIVEPERSON, INC.
		(Registrant)
Date:	November 8, 2022	By:	/s/ ROBERT P. LOCASCIO
		Name:	Robert P. LoCascio
		Title:	Chief Executive Officer (Principal Executive Officer)
Date:	November 8, 2022	By:	/s/ JOHN D. COLLINS
		Name:	John D. Collins
		Title:	Chief Financial Officer (Principal Financial Officer)

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EX-10.1

August 9, 2022 John Collins 1178 Stunt Road Calabasas, CA 91302 jcollins@liveperson.com Dear John, I am pleased to offer you the following amended terms of employment in your role of EVP, Chief Financial Officer ● Effective as of April 1, 2022 you will be paid salary at an annualized salary rate of $525,000 USD per year, to be paid in accordance with our current payroll practices (we currently pay salary on a semi-monthly basis on the 15th and last day of each month). ● You will be eligible to participate in the LivePerson annual bonus plan as it exists from time to time under terms comparable to other LivePerson employees of similar role and responsibility. Effective April 1, 2022 your target annual bonus for 2022 will be $$288,750.00 USD (55% of your base salary). Your actual annual bonus payout, as well as any bonus payouts for future fiscal years, if any, is anticipated to be paid during the first quarter of the subsequent fiscal year in accordance with then-current company practices, and will be determined in the sole discretion of the Company based on its then-current bonus program and policies including without limitation the annual goals set by the Board, Compensation Committee or the Company, the profitability of the company as compared to the Company’s fiscal plan and targets, your individual bonus target and goals, and your personal contribution to the company’s performance as determined by the Company in its sole discretion. Your actual bonus payment may be either greater or less than your target amount based on these criteria. Eligibility for and payment of such bonus, if any, is conditioned on your being actively employed by LivePerson as of the applicable payment date of the Company bonus payout. In any year, LivePerson may determine not to pay any bonus based on the above criteria. LivePerson reserves the right in the future to amend or terminate its bonus plan at any time. ● You will be eligible for vacation in accordance with LivePerson’s vacation policy as it exists from time to time. Under the current policy, you will accrue vacation at the approximate rate of 1.66 vacation days per month (20 days per year). ● You will be eligible to enroll in the LivePerson benefits, health and disability insurance programs subject to the terms and conditions of the applicable plans and policies, as they exist from time to time. You will be eligible to participate in the company’s 401(k) savings plan following your employment start date subject to the terms and conditions of the plan. ● Your employment remains premised upon your previous successful completion of the Company’s background verification of your prior employment and other information provided by you, as well as proof of identity and continued authorization to work in the United States, as required by law. ● In the event that your employment is terminated by the Company without Cause (as defined below), and provided that within sixty (60) days following your termination date you timely execute and do not revoke a separation and release agreement on customary terms drafted by and satisfactory to the Company (a “Release”), the Company will provide you with severance and benefits as follows (i) severance pay equal to six (6) months pay at your then current base salary rate in accordance with the Company’s normal payroll practices, (ii) reimbursement for the differential cost of continuation of your then-current health insurance benefits under COBRA (provided you timely elect COBRA) for a period of six (6) months and, (iii) if such termination occurs on or before the date that bonuses are paid for a completed fiscal year prior to termination, a payment equal to the bonus you would have received for the prior completed fiscal year had you remained employed on the applicable Company payout date that bonuses for such fiscal year are paid. All payments hereunder shall be payable in accordance with the payment procedures described below. For the avoidance of doubt, the foregoing severance shall not be paid in the event that your employment is terminated by reason of your voluntary resignation. EXHIBIT 10.1

● In the event that, within the 3-month period immediately prior to or the 12-month period immediately following, a Change of Control (as defined below) your employment is terminated (a) by the Company without Cause or (b) by you for Good Reason (defined below); and provided that within sixty (60) days following your termination date you timely execute and do not revoke a Release (as defined above), the Company will provide you with (i) severance pay equal to twelve (12) months pay at your then current base salary rate in accordance with the Company’s normal payroll practices, (ii) reimbursement for the differential cost of continuation of your then-current health insurance benefits under COBRA (provided you timely elect COBRA) for a period of twelve (12) months, (iii) a bonus payment equal to your target bonus for the prior completed fiscal year (if not yet paid); (iv) a bonus payment equal to your target bonus prorated for the number of months you were employed during the then-current fiscal year prior to termination, and (v) any outstanding unvested option and/or other equity awards held by you at the time of termination shall become immediately vested and exercisable on your termination date. The vested portion of any outstanding option and/or other equity awards held by you shall remain exercisable for 90 days following your date of termination, but in no event later than the original term of the option as set forth in the applicable award agreement. The foregoing benefits will be provided commencing on the later of (a) the date of the Change of Control or (b) the date of termination of your employment with the Company within the referenced time period above. ● In the event that your employment is voluntarily terminated at any time by you (other than for Good Reason as set forth herein), or by the Company for Cause, you will be entitled only to your earned and unpaid compensation earned through the date of your termination of employment in accordance with applicable law. You will not be entitled to severance, option acceleration, or any other compensation or consideration that you might have received had your employment with the Company not been terminated. ● Severance payments described above shall commence on the Company's first regularly scheduled payroll date that occurs as soon as practicable after the conditions set forth above are satisfied, and with respect to bonus payments, on the applicable bonus payout date bonuses are paid by the Company but in any event all severance and bonus payments hereunder shall be paid in full no later than the fifteenth (15th) day of the third (3rd) month following the end of your first tax year in which your termination of employment occurs, or, if later, the fifteenth (15th) day of the third (3rd) month following the end of the Company's first tax year in which your termination of employment occurs, as provided in Treasury Regulation Section 1.409A-1(b)(4). The parties intend that the payments and benefits provided pursuant to this letter are exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, the regulations and other guidance under and any state law of similar effect ("Section 409A") and any ambiguities herein will be interpreted to be so exempt. Notwithstanding anything herein to the contrary or otherwise, except to the extent that any reimbursement described in this Agreement does not constitute a “deferral of compensation” within the meaning of Section 409A, any reimbursement described in herein shall meet the following requirements: (a) the amount of expenses eligible for reimbursement during any calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year, (b) the reimbursements for expenses provided herein shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred, (c) the right to reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit, and (d) the reimbursements shall be made pursuant to objectively determinable and nondiscretionary Company policies and procedures regarding such reimbursement of expenses. Notwithstanding anything herein to the contrary, the Company shall have no liability to you or to any other person, for any taxes, penalties or otherwise, if the payments and benefits provided pursuant to this letter that are intended to be exempt from Section 409A are not so exempt. ● If (i) the aggregate of all amounts and benefits due to the Executive under this Agreement or under any other plan, program, agreement, or policy of the Company or any of its affiliates would, if received by the Executive in full and valued pursuant to Section 280G of the Code, constitute “parachute payments” as defined in Section 280G of the Code (collectively, “280G Benefits”), and if (ii) such aggregate amount would, if reduced by all federal, state, and local taxes applicable thereto, including the excise tax imposed pursuant to Section 4999 of the Code, be less than the amount that the Executive would receive, after all taxes, if the Executive received aggregate 280G Benefits equal (as valued pursuant to Section 280G of the Code) to $1.00 less than three times the Executive’s “base amount” as defined in Section 280G of the Code, then (iii) such 280G Benefits shall (to the extent that the reduction of such 280G Benefits would achieve the intended result) be reduced or eliminated to the extent necessary so that the aggregate 280G Benefits received by 2

the Executive will not constitute parachute payments, as follows: first, any amounts, the full amount of which would otherwise be considered a “parachute payment” under Treasury Regulation § 1.280G-1, Q&A-24(a) (after taking into account Q&A-24(a)(2)), shall be reduced to the extent necessary to eliminate the 280G Benefits, in reverse order of their regularly scheduled payment dates; and second, any remaining 280G Benefits to which Treasury Regulation § 1.280G-1, Q&A-24(b) applies shall be reduced to the extent necessary to eliminate the 280G Benefits, in reverse order of their regularly scheduled payment dates; and third, any remaining 280G Benefits to which Treasury Regulation § 1.280G-1, Q&A-24(c) applies shall be reduced to the extent necessary to eliminate the 280G Benefits, in reverse order of their regularly scheduled vesting dates. The determinations with respect to this Section shall be made by an independent auditor (the “Auditor”) paid by the Company. The Auditor shall be the Company’s regular independent auditor unless the Executive reasonably objects to the use of that firm, in which event the Auditor will be a nationally recognized United States public accounting firm chosen by the Parties. ● For purposes hereof, “Cause” shall mean a determination by the Company that: (i) you materially failed to perform your specified or fundamental duties to the Company or any of its subsidiaries, (ii) you were convicted of, or pled nolo contendere to, a felony (regardless of the nature of the felony), or any other crime involving dishonesty, fraud, or moral turpitude, (iii) you engaged in or acted with gross negligence or willful misconduct (including but not limited to acts of fraud, criminal activity or professional misconduct) in connection with the performance of your duties and responsibilities to the Company or any of its subsidiaries, (iv) you failed to substantially comply with the written rules and policies of the Company or any of its subsidiaries governing employee conduct or with the lawful directives of the Board of Directors, or (v) you breached any non-disclosure, non-solicitation or other restrictive covenant obligation to the Company or any of its subsidiaries. If the Company in its reasonable discretion determines that an event or incident described in to subparagraph (i) or (iv) of the definition of Cause is curable, then in order to terminate your employment for Cause pursuant to subparagraph (i) or (iv) of the definition of Cause, the Company shall (a) provide you with written notice of the event or incident that it considers to be “Cause” within 30 calendar days following its occurrence, (b) provide you with a period of at least 15 calendar days to cure the event or incident, and (c) if the Cause persists following the cure period, terminate your employment by written termination letter any time within 60 calendar days following the date that notice to cure was delivered to you. ● For purposes hereof, “Change of Control” shall be defined as, and limited to: (i) any person’s, entity’s or affiliated group’s becoming the beneficial owner or owners of more than fifty percent (50%) of the outstanding equity securities of the Company, or otherwise becoming entitled to vote shares representing more than fifty percent (50%) of the undiluted total voting power of the Company’s then- outstanding securities eligible to vote to elect members of the Board (the “Voting Securities”); (ii) a consolidation or merger (in one transaction or a series of related transactions) of the Company pursuant to which the holders of the Company’s equity securities immediately prior to such transaction or series of related transactions are not the holders immediately after such transaction or series of related transactions of at least fifty-one percent (51%) of the Voting Securities of the entity surviving such transaction or series of related transactions; or (iii) the sale or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company. ● For purposes hereof, “Good Reason” shall mean one or all of the following conditions arising without your consent: (i) a material reduction in or failure to pay your annual base salary by the Company other than as part of an across-the-board reduction in parity with a reduction applicable to all employees or to other employees of similar role and responsibility; (ii) a material reduction by the Company of your role, responsibilities, organizational seniority and title other than as agreed to by you in writing, or (iii) a relocation of your required full-time physical work location to a location more than 60 miles from its location on the date hereof (or from such other location to which you have consented after the date hereof), unless such new location is closer to your primary residence than the prior location. To be entitled to terminate your employment for Good Reason, you must (a) provide written notice to the Company of the event or change you consider constitutes “Good Reason” within 30 calendar days following its occurrence, (b) provide the Company with a period of at least 30 calendar days to cure the event or change, and (c) if the Good Reason persists following the cure period, actually resign by written resignation letter within 60 calendar days following the event or change. ● If any law, rule or regulation applicable to the Company or its affiliates (including any rule or requirement of any nationally recognized stock exchange on which the stock of the Company or its affiliates has been 3

listed), to comply with such laws requires the forfeiture or recoupment of any amount paid or payable to you, you hereby consents to such forfeiture or recoupment, in each case in the time and manner determined by the Company in its reasonable good faith discretion. Furthermore, if you engage in any act of embezzlement, fraud or dishonesty involving the Company or its affiliates which results in a financial loss to the Company or its affiliates, the Company shall be entitled to recoup an amount from you determined by the Company in its reasonable discretion. ● This letter shall not be construed as an agreement (either express or implied) to employ you, or for any guaranteed term of employment, and shall in no way alter the Company’s policy of employment at-will, under which both the Company and you remain free to end the employment relationship for any reason, at any time, with or without cause or notice. Your employment with LivePerson is at-will and may be terminated by you or LivePerson at any time with or without cause and with or without notice. ● The terms and conditions of the Proprietary Information, Developments, and Non-Solicitation Agreement executed between you and the Company and your obligations thereunder are incorporated herein by reference. ● The Company and you agree that the Company shall have the right to assign this Agreement, and, accordingly, this Agreement shall inure to the benefit of, be binding upon and may be enforced by, any and all successors and assigns. Your rights and obligations under this Agreement are personal to you and may not be assigned or otherwise transferred. This Agreement shall be interpreted and construed by the laws of the State of New York, without regard to conflict of laws provisions. Each party hereby submits to and acknowledges and recognizes the jurisdiction of the courts of the State of New York or if appropriate, a federal court located in New York (which courts, for purposes of this Agreement, are the only courts of competent jurisdiction) over any suit, action or other proceeding arising out of, under or in connection with this Agreement or the subject matter hereof. Accepted and agreed: Sincerely, ______________ Rob LoCascio Chief Executive Officer ______________ Date Accepted by: ______________ John Collins ______________ Date 4 /s/ Rob LoCascio /s/ John Collins August 9, 2022 August 9, 2022 Chief Financial Officer

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Robert P. LoCascio, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date:	November 8, 2022	By:	/s/ ROBERT P. LOCASCIO
		Name:	Robert P. LoCascio
		Title:	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, John Collins, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date:	November 8, 2022	By:	/s/ John Collins
		Name:	John Collins
		Title:	Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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

(1)the Quarterly Report of the Company on Form 10-Q for the period ended September 30, 2022, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

Date:	November 8, 2022	By:	/s/ ROBERT P. LOCASCIO
		Name:	Robert P. LoCascio
		Title:	Chief Executive Officer (Principal Executive Officer)

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

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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

(1)the Quarterly Report of the Company on Form 10-Q for the period ended September 30, 2022, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

Date:	November 8, 2022	By:	/s/ John Collins
		Name:	John Collins
		Title:	Chief Financial Officer (Principal Financial Officer)

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

XML

Cover - shares	9 Months Ended
	Sep. 30, 2022	Nov. 03, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	000-30141
Entity Registrant Name	LIVEPERSON, INC.
Entity Central Index Key	0001102993
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	13-3861628
Entity Address, Address Line One	530 7th Ave, Floor M1
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10018
City Area Code	(212)
Local Phone Number	609-4200
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	LPSN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		75,328,068

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 393,330	$ 521,846
Accounts receivable, net of allowances of $8,511 and $6,338 as of September 30, 2022 and December 31, 2021, respectively	100,741	93,804
Prepaid expenses and other current assets	31,919	20,626
Total current assets	525,990	636,276
Operating lease right of use assets (Note 10)	2,270	1,977
Property and equipment, net (Note 6)	135,830	124,726
Contract acquisition costs	39,903	40,675
Intangibles, net (Note 5)	81,457	85,554
Goodwill (Note 5)	300,578	291,215
Deferred tax assets	4,570	5,034
Investment in joint venture	3,993	0
Other assets	2,487	1,199
Total assets	1,097,078	1,186,656
Current liabilities:
Accounts payable	11,975	16,942
Accrued expenses and other current liabilities (Note 7)	118,421	104,297
Deferred revenue (Note 2)	103,219	98,808
Operating lease liability (Note 10)	3,221	3,380
Total current liabilities	236,836	223,427
Deferred revenue, net of current portion (Note 2)	287	54
Convertible senior notes, net (Note 8)	736,475	574,238
Operating lease liability, net of current portion (Note 10)	698	2,733
Deferred tax liability	2,355	2,049
Other liabilities	30,916	34,718
Total liabilities	1,007,567	837,219
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.001 par value - 5,000,000 shares authorized, none issued	0	0
Common stock, $0.001 par value - 200,000,000 shares authorized, 77,934,440 and 74,980,546 shares issued, 75,188,197 and 72,234,303 shares outstanding as of September 30, 2022 and December 31, 2021, respectively	78	75
Additional paid-in capital	757,162	871,788
Treasury stock - 2,746,243 shares	(3)	(3)
Accumulated deficit	(650,638)	(516,859)
Accumulated other comprehensive loss	(17,088)	(5,564)
Total stockholders’ equity	89,511	349,437
Total liabilities and stockholders’ equity	$ 1,097,078	$ 1,186,656

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Accounts receivable, allowances including credit loss and sales reserve	$ 8,511	$ 6,338
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized (in shares)	5,000,000	5,000,000
Preferred stock, issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	200,000,000	200,000,000
Common stock, issued (in shares)	77,934,440	74,980,546
Common stock, outstanding (in shares)	75,188,197	72,234,303
Treasury stock (in shares)	2,746,243	2,746,243

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Statement [Abstract]
Revenue	$ 129,561	$ 118,327	$ 392,323	$ 345,823
Costs and expenses
Cost of revenue	43,681	38,795	138,297	112,377
Sales and marketing	49,448	40,852	167,563	116,427
General and administrative	32,171	17,193	92,152	47,784
Product development	44,744	41,734	156,568	112,715
Restructuring costs	7,111	44	17,949	3,269
Amortization of purchased intangibles	920	488	2,742	1,237
Total costs and expenses	178,075	139,106	575,271	393,809
Loss from operations	(48,514)	(20,779)	(182,948)	(47,986)
Other income (expense), net:
Interest income (expense), net	401	(9,442)	(1,713)	(27,852)
Other income (expense), net	5,114	(48)	1,908	3,002
Total other income (expense), net	5,515	(9,490)	195	(24,850)
Loss before provision for income taxes	(42,999)	(30,269)	(182,753)	(72,836)
Provision for income taxes	249	2,538	1,270	2,285
Net loss	$ (43,248)	$ (32,807)	$ (184,023)	$ (75,121)
Net loss per share of common stock:
Basic net loss per common share (in dollars per share)	$ (0.56)	$ (0.47)	$ (2.39)	$ (1.09)
Diluted net loss per common share (in dollars per share)	$ (0.56)	$ (0.47)	$ (2.39)	$ (1.09)
Weighted-average shares used to compute net loss per share:
Weighted average shares outstanding used in basic net loss per common share calculation (in shares)	77,784,346	69,798,839	76,969,629	68,926,203
Weighted average shares outstanding used in diluted net loss per common share calculation (in shares)	77,784,346	69,798,839	76,969,629	68,926,203

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Stock-based compensation expense	$ 31,900	$ 18,300	$ 100,300	$ 48,000
Depreciation expense			21,414	20,471
Cost of revenue
Stock-based compensation expense	2,905	1,337	9,156	4,618
Depreciation expense	2,402	2,552	7,398	7,720
Amortization of purchased intangibles	4,811	1,343	13,788	3,702
Sales and marketing
Stock-based compensation expense	6,021	4,228	18,612	11,383
Depreciation expense	637	602	1,794	1,820
General and administrative
Stock-based compensation expense	12,034	4,103	35,703	9,863
Depreciation expense	109	15	342	103
Product development
Stock-based compensation expense	10,980	8,601	36,852	22,103
Depreciation expense	$ 3,915	$ 3,724	$ 11,880	$ 10,828

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Net loss	$ (43,248)	$ (32,807)	$ (184,023)	$ (75,121)
Foreign currency translation adjustment	(5,026)	(3,056)	(11,524)	(4,237)
Comprehensive loss	$ (48,274)	$ (35,863)	$ (195,547)	$ (79,358)

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (unaudited) - USD ($) $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Adjustment	Adjustment Additional Paid-in Capital	Adjustment Accumulated Deficit
Beginning balance at Dec. 31, 2020	$ 243,934	$ 70	$ (3)	$ 635,672	$ (391,885)	$ 80
Beginning balance (in shares) at Dec. 31, 2020		70,264,265	(2,709,830)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued upon exercise of stock options	2,617			2,617
Common stock issued upon exercise of stock options (in shares)		209,185
Common stock issued upon vesting of restricted stock units (“RSUs”)	0	$ 1		(1)
Common stock issued upon vesting of restricted stock units (in shares)		454,508
Stock-based compensation	9,225			9,225
Cash awards settled in shares of the Company’s common stock	25,925			25,925
Cash awards settled in shares of the company's common stock (in shares)		400,700
Common stock issued under Employee Stock Purchase Plan	1,257			1,257
Common stock issued under Employee Stock Purchase Plan (in shares)		22,544
Net loss	(21,195)				(21,195)
Other comprehensive loss	(1,746)					(1,746)
Ending balance at Mar. 31, 2021	260,017	$ 71	$ (3)	674,695	(413,080)	(1,666)
Ending balance (in shares) at Mar. 31, 2021		71,351,202	(2,709,830)
Beginning balance at Dec. 31, 2020	243,934	$ 70	$ (3)	635,672	(391,885)	80
Beginning balance (in shares) at Dec. 31, 2020		70,264,265	(2,709,830)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(75,121)
Ending balance at Sep. 30, 2021	262,109	$ 73	$ (3)	733,202	(467,006)	(4,157)
Ending balance (in shares) at Sep. 30, 2021		72,723,049	(2,709,830)
Beginning balance at Mar. 31, 2021	260,017	$ 71	$ (3)	674,695	(413,080)	(1,666)
Beginning balance (in shares) at Mar. 31, 2021		71,351,202	(2,709,830)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued upon exercise of stock options	3,999			3,999
Common stock issued upon exercise of stock options (in shares)		252,155
Common stock issued upon vesting of restricted stock units (“RSUs”)	0	$ 1		(1)
Common stock issued upon vesting of restricted stock units (in shares)		252,218
Stock-based compensation	9,524			9,524
Cash awards settled in shares of the Company’s common stock	7,578			7,578
Cash awards settled in shares of the company's common stock (in shares)		137,300
Common stock issued under Employee Stock Purchase Plan	1,128			1,128
Common stock issued under Employee Stock Purchase Plan (in shares)		24,270
Net loss	(21,119)				(21,119)
Other comprehensive loss	565					565
Ending balance at Jun. 30, 2021	261,692	$ 72	$ (3)	696,923	(434,199)	(1,101)
Ending balance (in shares) at Jun. 30, 2021		72,017,145	(2,709,830)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued upon exercise of stock options	3,036			3,036
Common stock issued upon exercise of stock options (in shares)		191,693
Common stock issued upon vesting of restricted stock units (“RSUs”)	0
Common stock issued upon vesting of restricted stock units (in shares)		142,867
Stock-based compensation	12,148			12,148
Common stock issued under Employee Stock Purchase Plan	1,083			1,083
Common stock issued under Employee Stock Purchase Plan (in shares)		19,882
Net loss	(32,807)
Other comprehensive loss	(3,056)					(3,056)
Ending balance at Sep. 30, 2021	262,109	$ 73	$ (3)	733,202	(467,006)	(4,157)
Ending balance (in shares) at Sep. 30, 2021		72,723,049	(2,709,830)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with acquisitions	20,013	$ 1		20,012
Issuance of common stock in connection with acquisitions (in shares)		351,462
Ending balance at Dec. 31, 2021	349,437	$ 75	$ (3)	871,788	(516,859)	(5,564)
Ending balance (Accounting Standards Update 2020-06) at Dec. 31, 2021							$ (159,407)	$ (209,651)	$ 50,244
Ending balance (in shares) at Dec. 31, 2021		74,980,546	(2,746,243)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued upon exercise of stock options	506			506
Common stock issued upon exercise of stock options (in shares)		40,483
Common stock issued upon vesting of restricted stock units (“RSUs”)	0
Common stock issued upon vesting of restricted stock units (in shares)		444,043
Stock-based compensation	20,522			20,522
Cash awards settled in shares of the Company’s common stock	17,299	$ 1		17,298
Cash awards settled in shares of the company's common stock (in shares)		735,519
Common stock issued under Employee Stock Purchase Plan	1,415			1,415
Common stock issued under Employee Stock Purchase Plan (in shares)		82,100
Issuance of common stock in connection with acquisitions	17,637	$ 1		17,636
Issuance of common stock in connection with acquisitions (in shares)		779,946
Net loss	(65,364)				(65,364)
Other comprehensive loss	(1,699)					(1,699)
Ending balance at Mar. 31, 2022	180,346	$ 77	$ (3)	719,514	(531,979)	(7,263)
Ending balance (in shares) at Mar. 31, 2022		77,062,637	(2,746,243)
Beginning balance at Dec. 31, 2021	$ 349,437	$ 75	$ (3)	871,788	(516,859)	(5,564)
Beginning balance (Accounting Standards Update 2020-06) at Dec. 31, 2021							$ (159,407)	(209,651)	50,244
Beginning balance (in shares) at Dec. 31, 2021		74,980,546	(2,746,243)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued upon exercise of stock options (in shares)	200,000
Net loss	$ (184,023)
Ending balance at Sep. 30, 2022	89,511	$ 78	$ (3)	757,162	(650,638)	(17,088)
Ending balance (Accounting Standards Update 2020-06) at Sep. 30, 2022								(209,700)	50,200
Ending balance (in shares) at Sep. 30, 2022		77,934,440	(2,746,243)
Beginning balance at Mar. 31, 2022	180,346	$ 77	$ (3)	719,514	(531,979)	(7,263)
Beginning balance (in shares) at Mar. 31, 2022		77,062,637	(2,746,243)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued upon exercise of stock options	389			389
Common stock issued upon exercise of stock options (in shares)		25,295
Common stock issued upon vesting of restricted stock units (“RSUs”)	1	$ 1		0
Common stock issued upon vesting of restricted stock units (in shares)		372,500
Stock-based compensation	18,826			18,826
Common stock issued under Employee Stock Purchase Plan	1,403			1,403
Common stock issued under Employee Stock Purchase Plan (in shares)		99,495
Net loss	(75,411)				(75,411)
Other comprehensive loss	(4,799)					(4,799)
Ending balance at Jun. 30, 2022	120,755	$ 78	$ (3)	740,132	(607,390)	(12,062)
Ending balance (in shares) at Jun. 30, 2022		77,559,927	(2,746,243)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued upon exercise of stock options	343			343
Common stock issued upon exercise of stock options (in shares)		134,423
Common stock issued upon vesting of restricted stock units (“RSUs”)	0
Common stock issued upon vesting of restricted stock units (in shares)		161,272
Stock-based compensation	15,843			15,843
Common stock issued under Employee Stock Purchase Plan	844			844
Common stock issued under Employee Stock Purchase Plan (in shares)		78,818
Net loss	(43,248)				(43,248)
Other comprehensive loss	(5,026)					(5,026)
Ending balance at Sep. 30, 2022	$ 89,511	$ 78	$ (3)	$ 757,162	$ (650,638)	$ (17,088)
Ending balance (Accounting Standards Update 2020-06) at Sep. 30, 2022								$ (209,700)	$ 50,200
Ending balance (in shares) at Sep. 30, 2022		77,934,440	(2,746,243)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
OPERATING ACTIVITIES:
Net loss	$ (184,023,000)	$ (75,121,000)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Stock-based compensation expense	100,323,000	47,967,000
Depreciation	21,414,000	20,471,000
Amortization of purchased intangibles and finance leases	16,530,000	4,939,000
Amortization of debt issuance costs	2,831,000	1,858,000
Accretion of debt discount on convertible senior notes	0	24,770,000
Allowance for credit losses	4,669,000	2,431,000
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	(8,568,000)	0
Gain on settlement of leases	0	(3,483,000)
Deferred income taxes	770,000	(1,129,000)
Changes in operating assets and liabilities:
Accounts receivable	(13,856,000)	(5,827,000)
Prepaid expenses and other current assets	(13,519,000)	(10,269,000)
Contract acquisition costs noncurrent	(2,842,000)	(4,765,000)
Other assets	(123,000)	741,000
Accounts payable	(4,229,000)	(354,000)
Accrued expenses and other current liabilities	(12,234,000)	22,176,000
Deferred revenue	7,450,000	14,925,000
Operating lease liabilities	(2,148,000)	(4,018,000)
Other liabilities	8,084,000	330,000
Net cash (used in) provided by operating activities	(79,471,000)	35,642,000
INVESTING ACTIVITIES:
Purchases of property and equipment, including capitalized software	(35,212,000)	(33,821,000)
Investment in joint venture	(3,993,000)	0
Payments for acquisition, net of cash acquired	(3,458,000)	(23,014,000)
Repayment of debt acquired in acquisition	0	(1,955,000)
Payments for intangible assets	(1,394,000)	(1,931,000)
Net cash used in investing activities	(44,057,000)	(60,721,000)
FINANCING ACTIVITIES:
Principal payments for financing leases	(2,785,000)	(2,604,000)
Proceeds from issuance of common stock in connection with the exercise of options and ESPP	1,238,000	13,127,000
Payments on conversion of convertible senior notes	0	(2,000)
Net cash (used in) provided by financing activities	(1,547,000)	10,521,000
Effect of foreign exchange rate changes on cash and cash equivalents	(4,713,000)	(5,072,000)
Net decrease in cash, cash equivalents, and restricted cash	(129,788,000)	(19,630,000)
Cash, cash equivalents, and restricted cash - beginning of year	523,532,000	654,152,000
Cash, cash equivalents, and restricted cash - end of period	393,744,000	634,522,000
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract]
Cash and cash equivalents	393,330,000	633,042,000
Restricted cash in prepaid expenses and other current assets	414,000	1,480,000
Total cash, cash equivalents, and restricted cash	393,744,000	634,522,000
Supplemental disclosure of other cash flow information:
Cash paid for income taxes	3,079,000	2,219,000
Cash paid for interest	1,895,000	1,981,000
Supplemental disclosure of non-cash investing and financing activities:
Increase in convertible senior notes, net upon adoption of ASU 2020-06 (Note 1)	159,407,000	0
Purchase of property and equipment recorded in accounts payable	113,000	581,000
Issuance of shares of common stock to settle cash awards	17,298,000	33,503,000
Right of use assets obtained in exchange for operating lease liabilities	2,417,000	1,856,000
Noncash or part noncash acquisition, contingent liability	6,113,000
Noncash or part noncash acquisition, contingent liability	6,113,000
WildHealth
Supplemental disclosure of non-cash investing and financing activities:
Stock issued	$ 17,675,000	0
Issuance of 779,946 shares of common stock in connection with the WildHealth transaction in February 2022 (shares)	776,825
Noncash or part noncash acquisition, contingent liability	$ 38,151,000	0
Issuance of 779,946 shares of common stock in connection with the WildHealth transaction in February 2022 (shares)	776,825
Stock issued	$ 17,675,000	0
Noncash or part noncash acquisition, contingent liability	38,151,000	0
ebot-7
Supplemental disclosure of non-cash investing and financing activities:
Stock issued	$ 0	20,012,000
Issuance of 779,946 shares of common stock in connection with the WildHealth transaction in February 2022 (shares)	351,462
Issuance of 779,946 shares of common stock in connection with the WildHealth transaction in February 2022 (shares)	351,462
Stock issued	$ 0	20,012,000
ebot-7 | Contingent earn-out
Supplemental disclosure of non-cash investing and financing activities:
Noncash or part noncash acquisition, contingent liability		6,026,000
Noncash or part noncash acquisition, contingent liability		$ 6,026,000

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Description of Business and Basis of Presentation

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Basis of Presentation

Description of Business and Basis of Presentation

LivePerson, Inc. (“LivePerson”, the “Company”, “we”, “our” or “us”) is a leading Conversational Artificial Intelligence (“AI”) company creating digital experiences that are Curiously Human. Conversational AI allows humans and machines to interact using natural language, including speech or text. During the past decade, consumers have made mobile devices the center of their digital lives, and they have made mobile messaging the center of communication with friends, family and peers. The Company’s technology enables consumers to connect with businesses through these same preferred conversational interfaces, including Facebook Messenger, short message service (“SMS”), WhatsApp, Apple Business Chat, Google Rich Business Messenger and Alexa. These messaging conversations harness human agents, bots and AI to power convenient, personalized and content-rich journeys across the entire consumer lifecycle, from discovery and research, to sales, service and support, and increasingly marketing, social, and brick and mortar engagements. For example, consumers can look up product info like ratings, images and pricing, search for stores, see product inventory, schedule appointments, apply for credit, approve repairs, and make purchases or payments - all without ever leaving the messaging channel. These AI and human-assisted conversational experiences constitute the Conversational Space, within which LivePerson has strategically developed one of the industry’s largest ecosystems of messaging endpoints and use cases.

The Conversational Cloud, the Company’s enterprise-class cloud-based platform, enables businesses to become conversational by securely deploying AI-powered messaging at scale for brands with tens of millions of customers and many thousands of agents. The Conversational Cloud powers conversations across each of a brand’s primary digital channels, including mobile apps, mobile and desktop web browsers, SMS, social media and third-party consumer messaging platforms. Brands can also use the Conversational Cloud to message consumers when they dial a 1-800 number instead of forcing them to navigate interactive voice response systems (“IVRs”) and wait on hold. Similarly, the Conversational Cloud can ingest traditional emails and convert them into messaging conversations, or embed messaging conversations directly into web advertisements, rather than redirect consumers to static website landing pages. Agents can manage all conversations with consumers through a single console interface, regardless of where the conversations originated.

LivePerson’s robust, cloud-based suite of rich messaging, real-time chat, AI and automation offerings features consumer and agent facing bots, intelligent routing and capacity mapping, real-time intent detection and analysis, queue prioritization, customer sentiment, analytics and reporting, content delivery, Payment Card Industry (“PCI”) compliance, co-browsing and a sophisticated proactive targeting engine. An extensible application programming interface (“API”) stack facilitates a lower cost of ownership by facilitating robust integration into back-end systems, as well as enabling developers to build their own programs and services on top of the platform. More than 40 APIs and software development kits are available on the Conversational Cloud.

LivePerson’s Conversational AI offerings put the power of bot development, training, management and analysis into the hands of the contact center and its agents, the teams most familiar with how to structure sales and service conversations to drive successful outcomes. The platform enables what the Company calls “the tango” of humans, AI and bots, whereby human agents act as bot managers, overseeing AI-powered conversations and seamlessly stepping into the flow when a personal touch is needed. Agents become ultra-efficient, leveraging the AI engine to serve up relevant content, define next-best actions and take over repetitive transactional work, so that the agent can focus on relationship building. By seamlessly integrating messaging with the Company’s proprietary Conversational AI, as well as third-party bots, the Conversational Cloud offers brands a comprehensive approach to scaling automations across their millions of customer conversations.

LivePerson’s consumer services offering is an online marketplace that connects independent service providers (“Experts”) who provide information and knowledge for a fee via mobile and online messaging with individual consumers (“Users”). Users seek assistance and advice in various categories including personal counseling and coaching, computers and programming, education and tutoring, spirituality and religion, and other topics.

LivePerson was incorporated in the State of Delaware in November 1995 and the LivePerson service was introduced in November 1998. The Company completed an initial public offering in April 2000 and is currently traded on the Nasdaq Global Select Market (“Nasdaq”) and the Tel Aviv Stock Exchange (“TASE”). LivePerson is headquartered in New York City. LivePerson has adopted an “employee-centric” workforce model that does not rely on traditional offices. During the second quarter of 2021, the Company decided to reoccupy some of its leased space to provide its employees with the option of working in an office space environment if they choose to do so.

Basis of Presentation

The accompanying condensed consolidated financial statements, and the financial data and other information disclosed in the notes to the condensed consolidated financial statements as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021 are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for a fair presentation of the Company’s condensed consolidated financial position, results of operations, comprehensive loss, and cash flows for the interim periods presented. The results of operations for any interim period are not necessarily indicative of the results of operations for any other future interim period or for a full fiscal year. The condensed consolidated balance sheet as of December 31, 2021 has been derived from audited consolidated financial statements at that date.

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

Principles of Consolidation

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

Equity Method Investment

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

Variable Interest Entities

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

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

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

the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company periodically reassesses whether it is the primary beneficiary of a VIE. See Note 18 – Variable Interest Entities for the Company’s assessment of VIEs.

Use of Estimates

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

Significant items subject to such estimates and assumptions include:

•revenue recognition;

•stock-based compensation;

•accounts receivable;

•valuation of goodwill;

•valuation of intangible assets;

•income taxes; and

•legal contingencies.

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

Goodwill

The Company evaluates goodwill for impairment on an annual basis in the third quarter, and more frequently whenever events or substantive changes in circumstances indicate that it is more likely than not that the carrying value of reporting unit exceeds its fair value in accordance with ASC 820, “Fair Value Measurement.” In performing the goodwill impairment test, the Company first assesses qualitative factors to determine the existence of impairment. If the qualitative factors indicate that the carrying value of a reporting unit more likely than not exceeds its fair value, the Company proceeds to a quantitative test to measure the existence and amount, if any, of goodwill impairment. The Company may also choose to bypass the qualitative assessment and proceed directly to the quantitative test.

In performing the quantitative test, impairment loss is recorded to the extent that the carrying value of the reporting unit exceeds its assessed fair value. The Company determines the fair value using the income and market approaches.

Under the income approach, the fair value of a reporting unit is the present value of its future cash flows as viewed from the eyes of a hypothetical market participant in an orderly transaction. These future cash flows are derived from expectations of revenue, expenses, tax deductions and credits, working capital flows, capital expenditures, and other projected sources and uses of cash, as applicable. Value indications are developed by discounting expected cash flows to their present value using a discount rate commensurate with the risks associated with the reporting unit subject to testing.

Under the market approach, the Company uses market multiples derived from comparable companies based on measures salient to investors in those companies.

Foreign Currency Translation

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

exchange transaction gain or losses are included in other income (expense), net in the accompanying condensed consolidated statements of operations.

Recently Issued Accounting Pronouncements

Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions: In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03 to clarify that a contractual restriction on the sale of an equity security is not considered part of a unit of account of the equity security, and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments also require the following disclosures for equity securities subject to the contractual sale restrictions:

1.The fair value of equity securities subject to the contractual sale restrictions reflected on the balance sheet.

2.The nature and remaining duration of the restriction(s).

3.The circumstances that could cause a lapse in the restriction(s).

This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those financial years. The Company does not expect the adoption of ASU 2022-03 to have a significant impact on its condensed consolidated financial statements.

Recently Adopted Accounting Pronouncements

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

•removing certain conditions required to meet the settlement criterion;

•clarifying that instruments that are not indexed to the issuer’s own stock must be remeasured at fair value through earnings at each reporting period; and

•clarifying the scope of reassessment guidance and disclosure requirements in Subtopic 815-40.

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

For SEC filers, excluding smaller reporting companies, the ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The ASU specifies that the guidance should be adopted as of the beginning of the annual fiscal year. In connection with the adoption of ASU 2020-06, the Company recognized a $50.2 million decrease to accumulated deficit, a $209.7 million decrease to additional paid-in capital, and a $159.4 million increase to convertible senior notes, net. See Note 8 – Convertible Senior Notes, Net and Capped Call Transactions for a description of the convertible senior notes, net on the condensed consolidated balance sheet.

With the exception of the new standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the quarter ended September 30, 2022, that are of significance or potential significance to the Company.

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Revenue Recognition

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

The majority of the Company’s revenue is generated from monthly service revenues, which is inclusive of its platform usage pricing model, and related professional services from the sale of its services. Revenues are recognized when control of these services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those services. No single customer accounted for 10% or more of the Company’s total revenue for the three and nine months ended September 30, 2022 and 2021.

Remaining Performance Obligation

As of September 30, 2022, the aggregate amount of the total transaction price allocated in contracts with original duration of one year or greater to the remaining performance obligations was $430.5 million. Approximately 88% of the Company’s remaining performance obligations is expected to be recognized during the next 24 months, with the balance recognized thereafter. The aggregate balance of unsatisfied performance obligations represents contracted revenue that has not yet been recognized, and does not include contract amounts that are cancellable by the customer, amounts associated with optional renewal periods, and any amounts related to performance obligations, which are billed and recognized as they are delivered.

Deferred Revenues

The Company records deferred revenues when cash payments are received or due in advance of its performance. The increase in the deferred revenue balance as of September 30, 2022 is primarily driven by cash payments received or due in advance of its performance obligations, partially offset by $67.2 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2021.

The following table presents deferred revenue by revenue source:

	Deferred Revenue
	September 30, 2022		December 31, 2021
	(In thousands)
Hosted services – Business	$	101,113	$	94,107
Hosted services – Consumer	795		870
Professional services – Business	1,311		3,831
Total deferred revenue - short term	$	103,219	$	98,808
Hosted services – Business	171		—
Professional services – Business	$	116	$	54
Total deferred revenue - long term	$	287	$	54

    

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue source:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Revenue:
Hosted services – Business	$	89,491	$	93,234	$	290,671	$	271,966
Hosted services – Consumer	9,460		9,123		27,711		27,944
Professional services – Business	30,610		15,970		73,941		45,913
Total revenue	$	129,561	$	118,327	$	392,323	$	345,823

Revenue by Geographic Location

The following table presents the Company’s revenues attributable to domestic and foreign operations for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
United States	$	89,619	$	80,096	$	267,189	$	229,802
Other Americas (1)	2,470		4,009		10,484		11,917
Total Americas	92,089		84,105		277,673		241,719
EMEA (2) (4)	16,107		23,399		57,890		68,092
APAC (3)	21,365		10,823		56,760		36,012
Total revenue	$	129,561	$	118,327	$	392,323	$	345,823

—————————————

(1)Canada, Latin America and South America

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

(3)Asia-Pacific (“APAC”)

(4)Includes revenues from the United Kingdom of $13.1 million and $14.3 million for the three months ended September 30, 2022 and 2021, respectively, and from the Netherlands of $1.3 million and $1.2 million for the three months ended September 30, 2022 and 2021, respectively. Includes revenues from the United Kingdom of $41.6 million and $42.4 million for the nine months ended September 30, 2022 and 2021, respectively, and from the Netherlands of $4.8 million and $3.7 million for the nine months ended September 30, 2022 and 2021, respectively.

Information about Contract Balances

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

In some arrangements, the Company allows customers to pay for access to the Conversational Cloud over the term of the software license. The Company refers to these as subscription transactions. Amounts recognized as revenue in excess of amounts billed are recorded as unbilled receivables. Unbilled receivables, anticipated to be invoiced in the next twelve months, are included in accounts receivable on the condensed consolidated balance sheet. Contract acquisition costs represent prepaid sales commissions. The opening and closing balances of the Company’s accounts receivable, unbilled receivables, contract acquisition costs, and deferred revenues are as follows (in thousands):

	Accounts Receivable		Unbilled Receivable		Contract Acquisition Costs (Non-current)		Deferred Revenue (Current)		Deferred Revenue (Non-current)
Opening balance as of December 31, 2021	$	69,259	$	24,545	$	40,675	$	98,808	$	54
Increase (decrease), net	5,863		1,074		(772)		4,411		233
Ending balance as of September 30, 2022	$	75,122	$	25,619	$	39,903	$	103,219	$	287

Accounts Receivable, Net

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience. The Company reviews its allowance for doubtful accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Accounts receivable are written off against the allowance for uncollectible accounts when the Company determines amounts are no longer collectible.

	Allowance for Doubtful Accounts
	(In thousands)
Balance as of December 31, 2021	$	6,338
Additions charged to costs and expenses	4,669
Deductions/write-offs	(2,496)
Balance as of September 30, 2022	$	8,511

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Net Loss Per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per Share

Basic earnings per share (“EPS”) excludes dilution for common stock equivalents and is computed by dividing net income or loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. All options, warrants, or other potentially dilutive instruments issued for nominal consideration are required to be included in the calculation of basic and diluted net income attributable to common stockholders. Diluted EPS is calculated using the “if-converted” method. The “if-converted” method is only assumed in periods where such application would be dilutive. In applying the “if-converted” method for diluted net income per share, the Company would assume conversion of the 2024 Notes at a ratio of 25.9182 shares of its common stock per $1,000 principal amount of the 2024 Notes. The Company would assume conversion of the 2026 Notes at a ratio of 13.2933 shares of its common stock per $1,000 principal amount of the 2026 Notes. Assumed converted shares of the Company’s common stock are weighted for the period the 2024 Notes and 2026 Notes were outstanding. The shares of common stock underlying the conversion option of the 2024 Notes and 2026 Notes were not included in the calculation of diluted income per share for the three and nine months ended September 30, 2022 and 2021.

See Note 8 – Convertible Senior Notes, Net and Capped Call Transactions for a description of the 2024 Notes and 2026 Notes.

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net loss (in thousands)	$	(43,248)	$	(32,807)	$	(184,023)	$	(75,121)
Weighted average number of shares outstanding, basic and diluted	77,784,346		69,798,839		76,969,629		68,926,203
Net loss per share, basic and diluted	$	(0.56)	$	(0.47)	$	(2.39)	$	(1.09)

The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows:

	As of September 30,
	2022	2021
Shares subject to outstanding common stock options and employee stock purchase plan	4,514,229	4,291,829
Restricted stock units	5,246,300	3,063,156
Fair value of earn-outs	11,996,072	697,133
Conversion option of the 2024 Notes	5,961,186	5,961,186
Conversion option of the 2026 Notes	6,879,283	6,879,283
Total	34,597,070	20,892,587

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Segment Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment Information

Segment InformationThe Company is organized into two operating segments for purposes of making operating decisions and assessing performance. The Business segment enables brands to leverage the Conversational Cloud’s sophisticated intelligence engine to connect with consumers through an integrated suite of mobile and online business messaging technologies. The Consumer segment facilitates online transactions between Experts and Users seeking information and knowledge for a fee via mobile and online messaging. Both segments currently generate their revenue primarily in the United States. The chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, evaluates performance, makes operating decisions, and allocates resources based on the operating income (loss) of each segment. The reporting segments follow the same accounting

polices used in the preparation of the Company’s condensed consolidated financial statements which are described in Note 1 – Description of Business and Basis of Presentation. The Company allocates cost of revenue, sales and marketing, and amortization of purchased intangibles to the segments, but it does not allocate product development expenses, general and administrative expenses, restructuring costs, or income tax expense because management does not use this information to measure performance of the operating segments. There are currently no inter-segment sales.

Summarized financial information by segment for the three months ended September 30, 2022, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	89,491	$	—	$	—	$	89,491
Hosted services – Consumer	—		9,460		—		9,460
Professional services – Business	30,610		—		—		30,610
Total revenue	120,101		9,460		—		129,561
Cost of revenue	42,392		1,289		—		43,681
Sales and marketing	42,826		6,622		—		49,448
Amortization of purchased intangibles	920		—		—		920
Unallocated corporate expenses	—		—		84,026		84,026
Operating income (loss)	$	33,963	$	1,549	$	(84,026)	$	(48,514)

Summarized financial information by segment for the three months ended September 30, 2021, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	93,234	$	—	$	—	$	93,234
Hosted services – Consumer	—		9,123		—		9,123
Professional services – Business	15,970		—		—		15,970
Total revenue	109,204		9,123		—		118,327
Cost of revenue	37,057		1,738		—		38,795
Sales and marketing	34,640		6,212		—		40,852
Amortization of purchased intangibles	488		—		—		488
Unallocated corporate expenses	—		—		58,971		58,971
Operating income (loss)	$	37,019	$	1,173	$	(58,971)	$	(20,779)

Summarized financial information by segment for the nine months ended September 30, 2022, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	290,671	$	—	$	—	$	290,671
Hosted services – Consumer	—		27,711		—		27,711
Professional services – Business	73,941		—		—		73,941
Total revenue	364,612		27,711		—		392,323
Cost of revenue	134,229		4,068		—		138,297
Sales and marketing	148,370		19,193		—		167,563
Amortization of purchased intangibles	2,742		—		—		2,742
Unallocated corporate expenses	—		—		266,669		266,669
Operating income (loss)	$	79,271	$	4,450	$	(266,669)	$	(182,948)

Summarized financial information by segment for the nine months ended September 30, 2021, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	271,966	$	—	$	—	$	271,966
Hosted services – Consumer	—		27,944		—		27,944
Professional services – Business	45,913		—		—		45,913
Total revenue	317,879		27,944		—		345,823
Cost of revenue	106,932		5,445		—		112,377
Sales and marketing	96,758		19,669		—		116,427
Amortization of purchased intangibles	1,237		—		—		1,237
Unallocated corporate expenses	—		—		163,768		163,768
Operating income (loss)	$	112,952	$	2,830	$	(163,768)	$	(47,986)

Geographic Information

The Company is domiciled in the United States and has international operations around the globe. The following table presents the Company’s long-lived assets by geographic region as of the dates presented:

	September 30, 2022		December 31, 2021
	(In thousands)
United States	$	476,244	$	444,318
Germany	42,927		52,342
Israel	23,161		20,754
Australia	12,031		12,771
Netherlands	3,320		4,566
Other (1)	13,405		15,629
Total long-lived assets	$	571,088	$	550,380

——————————————

(1)United Kingdom, Japan, France, Italy, Spain, Canada, and Singapore.

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets, Net

Goodwill

The changes in the carrying amount of goodwill for the nine months ended September 30, 2022 are as follows:

	Business		Consumer		Consolidated
	(In thousands)
Balance as of December 31, 2021	$	283,191	$	8,024	$	291,215
Adjustments to goodwill:
Acquisitions	15,511		—		15,511
Foreign exchange adjustment	(6,148)		—		(6,148)
Balance as of September 30, 2022	$	292,554	$	8,024	$	300,578

During the third quarter of 2022, the Company performed a quantitative analysis to determine whether it was more likely than not that goodwill impairment existed as of the annual impairment test date. As a result of this assessment, the Company concluded that the estimated fair values of each reporting unit exceeded their respective carrying values. Therefore, the Company did not record goodwill impairment for the three and nine months ended September 30, 2022. The Company also did not record goodwill impairment for the three and nine months ended September 30, 2021.

Intangible Assets, Net

Intangible assets, net, are summarized as follows:

	As of September 30, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Amortization Period
	(In thousands)
Amortizing intangible assets:
Technology	$	97,143	$	(41,938)	$	55,205	5.0 years
Customer relationships	31,795		(16,795)		15,000		10.0 years
Patents	10,234		(1,332)		8,902		12.8 years
Trademarks	1,275		(312)		963		5.0 years
Trade names	1,040		(273)		767		2.8 years
Other	914		(294)		620		4.1 years
Total intangible assets	$	142,401	$	(60,944)	$	81,457

    

	As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Amortization Period
	(In thousands)
Amortizing intangible assets:
Technology	$	90,626	$	(30,757)	$	59,869	5.1 years
Customer relationships	32,162		(15,164)		16,998		10.0 years
Patents	7,988		(1,137)		6,851		11.8 years
Trademarks	1,474		(135)		1,339		5.0 years
Trade names	460		(43)		417		2.1 years
Other	314		(234)		80		2.2 years
Total intangible assets	$	133,024	$	(47,470)	$	85,554

 

Amortization expense is calculated over the estimated useful life of the asset. A portion of this amortization is included in cost of revenue. Aggregate amortization expense for intangible assets, net was $4.8 million and $0.9 million for the three months ended September 30, 2022 and 2021, respectively, and $13.8 million and $2.2 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, estimated annual amortization expense for the next five years and thereafter is as follows:

	Estimated Amortization Expense
	(In thousands)
Remainder of fiscal 2022	$	4,626
2023	17,753
2024	15,965
2025	15,567
2026	12,901
Thereafter	14,645
Total	$	81,457

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Property and Equipment

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment, Net

The following table presents the detail of property and equipment, net for the periods presented:

	September 30, 2022		December 31, 2021
	(In thousands)
Computer equipment and software	$	123,237	$	120,685
Internal-use software development costs	150,831		122,479
Finance lease right of use assets	3,998		6,797
Furniture, equipment, and building improvements	519		258
Property and equipment, at cost	278,585		250,219
Less: accumulated depreciation	(142,755)		(125,493)
Property and equipment, net	$	135,830	$	124,726

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Accrued Expenses and Other Current Liabilities

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

The following table presents the detail of accrued expenses and other current liabilities for the periods presented:

	September 30, 2022		December 31, 2021
	(In thousands)
Professional services and consulting and other vendor fees	$	42,381	$	58,811
Payroll and other employee related costs	22,373		29,855
Short-term contingent earn-out	36,109		—
Sales commissions	2,010		4,269
Finance lease liability	3,412		3,738
Unrecognized tax benefits	2,377		2,424
Restructuring	5,710		1,694
Taxes other than income tax	1,196		918
Other	2,853		2,588
Total accrued expenses and other current liabilities	$	118,421	$	104,297

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Convertible Senior Notes and Capped Call Transactions

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Convertible Senior Notes and Capped Call Transactions

Convertible Senior Notes, Net and Capped Call Transactions

Convertible Senior Notes due 2024 and Capped Calls

In March 2019, the Company issued $230.0 million aggregate principal amount of its 0.750% Convertible Senior Notes due 2024 (the “2024 Notes”) in a private placement, which amount includes $30.0 million aggregate principal amount of such Notes issued pursuant to the exercise in full by the initial purchasers of their option to purchase additional 2024 Notes. Interest on the 2024 Notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2019.

The 2024 Notes will mature on March 1, 2024, unless earlier repurchased or redeemed by the Company or converted pursuant to their terms. The total net proceeds from the offering of the 2024 Notes, after deducting debt issuance costs, paid, or payable by the Company, was approximately $221.4 million.

Each $1,000 in principal amount of the 2024 Notes is initially convertible into 25.9182 shares of the Company’s common stock par value $0.001, which is equivalent to an initial conversion price of approximately $38.58 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its 2024 Notes in connection with such a corporate event. The 2024 Notes are not redeemable prior to the maturity date of the 2024 Notes and no sinking fund is provided for the 2024 Notes. If the Company undergoes a fundamental change (as defined in the indenture governing the 2024 Notes) prior to the maturity date, holders may require the Company to repurchase for cash all or any portion of their 2024 Notes in principal amounts of $1,000 or a multiple thereof at a fundamental change repurchase price equal to 100% of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Holders of the 2024 Notes may convert their 2024 Notes at their option at any time prior to the close of business on the business day immediately preceding November 1, 2023, in multiples of $1,000 principal amount, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2019 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2024 Notes on each applicable trading day as determined by the Company; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the indenture governing the 2024 Notes) per $1,000 principal amount of 2024 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the 2024 Notes on each such trading day; or (3) upon the occurrence of specified corporate events. On or after November 1, 2023, holders may convert all or any portion of their 2024 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the

maturity date, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election.

During the three and nine months ended September 30, 2022, the conditions allowing holders of the 2024 Notes to convert were not met.

The 2024 Notes are senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2024 Notes; equal in right of payment with the Company’s existing and future liabilities that are not so subordinated; effectively subordinated to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company.

Prior to the adoption of ASU 2020-06 on January 1, 2022, the Company separated the 2024 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that did not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $52.9 million and was determined by deducting the fair value of the liability component from the par value of the 2024 Notes. The equity component was not remeasured as long as it continued to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, was amortized to interest expense at an effective interest rate over the contractual term of the 2024 Notes. This accounting treatment no longer applies under ASU 2020-06.

Prior to the adoption of ASU 2020-06 on January 1, 2022, the Company allocated the total amount incurred of approximately $8.6 million to the liability and equity components of the 2024 Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component were approximately $6.6 million, were recorded as an additional debt discount and were amortized to interest expense using the effective interest method over the contractual term of the 2024 Notes. Issuance costs attributable to the equity component were approximately $2.0 million and recorded as a reduction of additional paid in capital in stockholders’ equity. This accounting treatment no longer applies under ASU 2020-06.

In accounting for the 2024 Notes after the adoption of ASU 2020-06, the 2024 Notes are accounted for as a single liability, and the carrying amount of the 2024 Notes is $227.5 million as of September 30, 2022, consisting of principal of $230.0 million, net of unamortized debt issuance costs of $2.5 million. The 2024 Notes were classified as long term liabilities as of September 30, 2022. The remaining term over which the 2024 Notes’ debt issuance costs will be amortized is 1.4 years. The effective interest rate on the debt was 1.53% for the three and nine months ended September 30, 2022.

In connection with the offering of the 2024 Notes, the Company entered into privately-negotiated capped call option transactions with certain counterparties (the “2024 capped calls”). The 2024 capped calls each have an initial strike price of approximately $38.58 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2024 Notes. The 2024 capped calls have initial cap prices of $57.16 per share, subject to certain adjustment events. The 2024 capped calls cover, subject to anti-dilution adjustments, approximately 5.96 million shares of common stock. The 2024 capped calls are generally intended to reduce or offset the potential dilution to the common stock upon any conversion of the 2024 Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The 2024 capped calls expire on March 1, 2024, subject to earlier exercise. The 2024 capped calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. In addition, the 2024 capped calls are subject to certain specified additional disruption events that may give rise to a termination of the 2024 capped calls, including changes in law, failure to deliver, and hedging disruptions. The 2024 capped calls are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost of $23.2 million incurred to purchase the 2024 capped calls was recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheet.

Convertible Senior Notes due 2026 and Capped Calls

In December 2020, the Company issued $517.5 million aggregate principal amount of its 0% Convertible Senior Notes due 2026 (the “2026 Notes” and together with the 2024 Notes, the “Notes”) in a private placement, which amount includes $67.5 million aggregate principal amount of such Notes issued pursuant to the exercise in full by the initial purchasers of their option to purchase additional 2026 Notes.

The 2026 Notes will mature on December 15, 2026, unless earlier repurchased or redeemed by the Company or converted pursuant to their terms. The total net proceeds from the offering of the 2026 Notes, after deducting debt issuance costs, paid or payable by the Company, was approximately $505.3 million.

Each $1,000 in principal amount of the 2026 Notes is initially convertible into 13.2933 shares of the Company’s common stock par value $0.001, which is equivalent to an initial conversion price of approximately $75.23 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its 2026 Notes in connection with such a corporate event. The 2026 Notes are not redeemable prior to the maturity date of the 2026 Notes and no sinking fund is provided for the 2026 Notes. If the Company undergoes a fundamental change (as defined in the indenture governing the 2026 Notes) prior to the maturity date, holders may require the Company to repurchase for cash all or any portion of their 2026 Notes in principal amounts of $1,000 or a multiple thereof at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid special interest to, but excluding, the fundamental change repurchase date.

Holders of the 2026 Notes may convert their 2026 Notes at their option at any time prior to the close of business on the business day immediately preceding August 15, 2026, in multiples of $1,000 principal amount, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2026 Notes on each applicable trading day as determined by the Company; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the indenture governing the 2026 Notes) per $1,000 principal amount of 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the 2026 Notes on each such trading day; (3) with respect to any 2026 Notes that the Company calls for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after August 15, 2026, holders may convert all or any portion of their 2026 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.

During the three and nine months ended September 30, 2022, the conditions allowing holders of the 2026 Notes to convert were not met.

The 2026 Notes are senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2026 Notes; equal in right of payment with the Company’s existing and future liabilities that are not so subordinated; effectively subordinated to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company.

Prior to the adoption of ASU 2020-06 on January 1, 2022, the Company separated the 2026 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that did not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $162.5 million and was determined by deducting the fair value of the liability component from the par value of the 2026 Notes. The equity component was not remeasured as long as it continued to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, was amortized to interest expense at an effective interest rate over the contractual term of the 2026 Notes. This accounting treatment no longer applies under ASU 2020-06.

Prior to the adoption of ASU 2020-06 on January 1, 2022, the Company allocated the total amount incurred of approximately $12.2 million to the liability and equity components of the 2026 Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component were approximately $8.5 million, were recorded as an additional debt discount and are amortized to interest expense using the effective interest method over the contractual term of the 2026 Notes. Issuance costs attributable to the equity component were approximately $3.7 million and recorded as a reduction of additional paid in capital in stockholders’ equity. This accounting treatment no longer applies under ASU 2020-06.

In accounting for the 2026 Notes after the adoption of ASU 2020-06, the 2026 Notes are accounted for as a single liability, and the carrying amount of the 2026 Notes is $509.0 million as of September 30, 2022, consisting of principal of $517.5 million, net of issuance costs of $8.5 million. The 2026 Notes were classified as long term liabilities as of September 30, 2022.The remaining term over which the 2026 Notes’ debt issuance costs will be amortized is 4.2 years. The effective interest rate on the debt was 0.40% for the three and nine months ended September 30, 2022.

In connection with the offering of the 2026 Notes, the Company entered into privately-negotiated capped call option transactions with certain counterparties (the “2026 capped calls”). The 2026 capped calls each have an initial strike price of approximately $75.23 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes. The 2026 capped calls have initial cap prices of $105.58 per share, subject to certain adjustment events. The 2026 capped calls cover, subject to anti-dilution adjustments, approximately 6.88 million shares of common stock. The 2026 capped calls are generally intended to reduce or offset the potential dilution to the common stock upon any conversion of the 2026 Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The 2026 capped calls expire on December 15, 2026, subject to earlier exercise. The 2026 capped calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. In addition, the 2026 capped calls are subject to certain specified additional disruption events that may give rise to a termination of the 2026 capped calls, including changes in law, failure to deliver, and hedging disruptions. The 2026 capped calls are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost of $46.1 million incurred to purchase the 2026 capped calls was recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheet.

The net carrying amount of the liability component of the Notes as of September 30, 2022 (post-ASU 2020-06 adoption) and as of December 31, 2021 (pre-ASU 2020-06 adoption) was as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Principal	$	747,500	$	747,500
Unamortized discount	—		(162,960)
Unamortized issuance costs	(11,025)		(10,302)
Net carrying amount	$	736,475	$	574,238

The net carrying amount of the equity component of the Notes as of September 30, 2022 (post-ASU 2020-06 adoption) and as of December 31, 2021 (pre-ASU 2020-06 adoption) was as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Proceeds allocated to the conversion options (debt discount)	$	—	$	215,434
Issuance costs	—		(5,783)
Net carrying amount	$	—	$	209,651

The following table sets forth the interest expense recognized related to the Notes:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Contractual interest expense	$	431	$	431	$	1,294	$	1,294
Amortization of issuance costs	946		630		2,831		1,858
Amortization of debt discount	—		8,396		—		24,770
Total interest expense	$	1,377	$	9,457	$	4,125	$	27,922

Interest expense of $1.4 million and $4.1 million are reflected as a component of interest expense, net in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2022, respectively.

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Acquisitions

9 Months Ended

Sep. 30, 2022

Business Combinations [Abstract]

Acquisitions

Acquisitions

In February 2022, the Company completed the acquisition of 100% of the equity of WildHealth, Inc. (“WildHealth”), a precision medicine company operating in the United States, for a total purchase price of $22.3 million. The purchase price consisted of approximately $4.6 million in cash and $17.7 million in shares of common stock of the Company. As part of the purchase price, the Company issued 776,825 common shares that had a total fair value of $20.8 million based on the closing market price of $26.81 on the acquisition date of February 7, 2022. This acquisition is part of the Company’s strategy to accelerate its technology-driven healthcare offerings by combining a rich healthcare data platform with Conversational AI to enable B2B healthcare brands to scale and personalize patient engagement. The transaction was accounted for as a business combination. In connection with the acquisition, the Company entered into stock forfeiture agreements with certain employees of WildHealth, under which a portion of the purchase price will be subject to vesting conditions based on continuing employment post acquisition. The Company has allocated the purchase consideration subject to the stock forfeiture agreements between pre and post combination periods.

Former stockholders of WildHealth have the right to receive in the aggregate up to an additional $120.0 million earn-out (to be settled in the Company’s equity or cash at the Company’s election, but with the cash election restricted to 18.0 percent of the total earn-out) based upon satisfaction of certain financial milestones over the period from October 31, 2022 through December 31, 2025. The Company has accounted for the earn-out as a compensation arrangement in accordance with ASC 718, “Compensation - Stock Compensation,” pursuant to which such earn-out payments are liability classified to be recognized over the requisite service periods. For the earn-outs, the Company accrued $14.7 million and $38.2 million for the three and nine months ended September 30, 2022, respectively, which is reflected as a component of other liabilities and accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets and as a component of stock-based compensation expense in the accompanying condensed consolidated statements of operations.

The purchase price allocation resulted in approximately $15.5 million of goodwill and $8.3 million of intangible assets. WildHealth is part of the Business Segment and is a separate reporting unit. Goodwill is primarily attributed to synergies from future expected economic benefits, including enhanced revenue growth from expanded capabilities. The goodwill will not be deductible for tax purposes. The intangible assets are being amortized over their expected period of benefit. A deferred tax liability for the identified intangibles has been recorded for $1.6 million. The Company recorded an indemnification asset of $1.2 million relating to a pre-acquisition liability assumed.

The following table summarizes the fair value amounts of identifiable assets acquired and liabilities assumed at the acquisition date:

	WildHealth Acquisition
	(In thousands)
Assets acquired
Cash	$	1,353
Other current assets	382
Fixed assets	248
Intangible assets	8,300
Other assets	1,037
Total assets acquired	$	11,320
Liabilities assumed
Current liabilities assumed	$	(1,463)
Deferred tax liabilities	(1,603)
Other liabilities assumed	(1,500)
Total liabilities assumed	(4,566)
Net assets acquired	6,754
Total acquisition consideration	22,265
Goodwill	$	15,511

Other current assets acquired in connection with the acquisition consisted primarily of accounts receivable and other short term assets. Current liabilities assumed in connection with the acquisition consisted primarily of accounts payable, deferred revenue and other short term liabilities. The following is the breakout of the intangible assets acquired:

	Fair Value		Useful life
	(In thousands)
Amortizing intangible assets:
Developed technology	$	7,100	5.0 years
Trade name	600		5.0 years
Fellowship content	600		5.0 years
Total amortizing intangible assets	$	8,300

The Company applied a multi-period excess earnings method of the income approach to estimate the fair values of the intangible assets acquired. The intangible assets acquired in the business acquisition were developed technology, trade name, and fellowship content for the fair value of $8.3 million, determined based on the estimated fair value of expected after-tax cash flows attributable to annual recurring revenue from customers. The Company applied various estimates and assumptions with respect to forecasted revenue growth rates, the revenue attributable to the existing customers over time and the discount rate. The fair values assigned to the other tangible and identifiable intangible assets acquired and liabilities assumed as part of the business combination were based on management’s estimates and assumptions. The Company began amortizing the intangible assets on the date of acquisition over a period of five years based on expected future cash flow. The amortization expense is recorded to amortization of purchased intangibles in the condensed consolidated statements of operations.

The Company incurred $0.3 million in acquisition costs related to the WildHealth transaction that was expensed in the period incurred, of which the amount expensed for the three months ended September 30, 2022 was immaterial, and is included in general and administrative expense in the accompanying condensed consolidated statements of operations.

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Leases

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Leases

Leases

The Company has operating and finance leases for its corporate offices and other service agreements. Its leases have remaining lease terms of less than one to four years, some of which include options to extend.

In connection with the leases, the Company recognized operating lease right of use assets of $2.3 million and $2.0 million and an aggregate lease liability of $3.9 million and $6.1 million in its condensed consolidated balance sheet as of September 30, 2022 and December 31, 2021, respectively.

On July 13, 2020, the Company announced its decision to transition to an employee-centric model under which employees work remotely rather than in traditional offices. In connection with this decision, the Company abandoned 14 leases in its global portfolio of office leases during 2020. As a result, the Company recognized accelerated amortization to fully reduce the carrying value of the associated right of use assets between the decision date and the cease use date. During the second quarter of 2021, the Company decided to reoccupy some of its leased space to provide its employees with the option of working in an office space environment if they choose to do so. There were no changes to the accounting for the lease liabilities associated with the leased office spaces. During the nine months ended September 30, 2021, the Company had a $3.5 million gain resulting from the settlement of leases.

As of September 30, 2022, in connection with a lease in Israel, the Company was required to pledge cash as collateral security to be maintained at an Israeli bank. The collateral security would remain in control of the bank, to be available in order to satisfy outstanding obligations under the lease contracts. Accordingly, the Company had cash at an Israeli bank of approximately $0.2 million at September 30, 2022, which is recorded as restricted cash in Prepaid expenses and other current assets in the condensed consolidated balance sheets. In the third quarter of 2021, the Company entered into a new lease in Australia and was required to pledge $0.2 million in cash as collateral security, which is also recorded as restricted cash in Prepaid expenses and other current assets in the condensed consolidated balance sheets.

The Company continues to actively assess its global lease portfolio. However, any additional de-recognition of right of use assets and incurrence of various one-time expenses in connection with early termination of additional leases are not expected to be material to its financial condition or results of operations.

Supplemental cash flow information related to leases for the periods listed are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,201	$	651	$	3,584	$	1,894
Operating cash flows for finance leases	44		77		162		256
Financing cash flows for finance leases	936		876		2,785		2,604

The components of lease costs for the periods listed are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Finance lease cost
Amortization of right of use assets	$	929	$	908	$	2,762	$	2,696
Interest	44		77		162		256
Operating lease cost	1,211		2,324		5,621		5,805
Total lease cost	$	2,184	$	3,309	$	8,545	$	8,757

	September 30, 2022		September 30, 2021
Weighted Average Remaining Lease Term:
Operating leases	1.5 years		2.7 years
Finance leases	1.3 years		2.1 years
Weighted Average Discount Rate:
Operating leases	7	%	7	%
Finance leases	4	%	4	%

Supplemental balance sheet information related to leases was as follows:

	Classification on the Condensed Consolidated Balance Sheet	September 30, 2022		December 31, 2021
		(In thousands)
Assets
Operating right of use assets	Operating lease right of use assets	$	2,270	$	1,977
Finance right of use assets	Property and equipment, net	3,998		6,797
Liabilities
Current liabilities:
Operating lease liability	Operating lease liability	$	3,221	$	3,380
Finance lease liability	Accrued expenses and other current liabilities	3,412		3,738
Non-current liabilities:
Operating lease liability	Operating lease liability, net of current portion	$	698	$	2,733
Finance lease liability	Other liabilities	277		2,780

Future minimum lease payments under non-cancellable operating and finance leases (with an initial or remaining lease term in excess of one year) are as follows:

	September 30, 2022
	Operating Leases		Finance Leases
	(In thousands)
2022 (remaining three months at September 30, 2022)	$	1,256	$	980
2023	2,242		2,609
2024	268		109
2025	304		81
2026	127		—
Total minimum lease payments	4,197		3,779
Less: present value adjustment	(278)		(90)
Present value of lease liabilities	$	3,919	$	3,689

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Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

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

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

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

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

Financial Assets and Liabilities

The carrying amount of cash, accounts receivable, and accounts payable approximate their fair value due to their short-term nature. The Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy as of September 30, 2022 and December 31, 2021, are summarized as follows:

	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	321,553	$	—	$	—	$	321,553
Total assets	$	321,553	$	—	$	—	$	321,553
Liabilities
Earn-outs treated as contingent consideration	$	—	$	—	$	23,282	$	23,282
Earn-outs treated as liability awards	—		—		41,843		41,843
Total liabilities	$	—	$	—	$	65,125	$	65,125

	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	416,178	$	—	$	—	$	416,178
Total assets	$	416,178	$	—	$	—	$	416,178
Liabilities
Contingent earn-out	$	—	$	—	$	29,830	$	29,830
Total liabilities	$	—	$	—	$	29,830	$	29,830

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

The Company’s money market funds are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as Level 1 within the fair value hierarchy. The Company’s contingent earn-out liability is measured at fair value on a recurring basis and is classified as Level 3 within the fair value hierarchy. On a nonrecurring basis, the Company uses fair value measures when analyzing asset impairment. Long-lived tangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present and the review indicates that the assets will not be fully recoverable, based on

undiscounted estimated cash flows over the remaining amortization periods, their carrying values are reduced to estimated fair value. The Company uses an income approach and inputs that constitute Level 3.

As of September 30, 2022, the fair value of the Notes, as further described in Note 8 – Convertible Senior Notes, Net and Capped Call Transactions above, was approximately $486.9 million. Management determines the fair value by utilizing an independent valuation specialist using the antithetic variable technique which is considered a Level 2 fair value measurement.

The changes in fair value of the Level 3 liabilities are as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Balance, beginning of year	$	29,830	$	—
Additions in the period	45,017		29,830
Change in fair value of contingent consideration	(8,568)		—
Change in fair value of liability awards	(1,154)		132
Payments	—		(132)
Balance, end of period	$	65,125	$	29,830

Certain former stakeholders of the Company’s acquisitions are eligible to receive additional cash or share considerations based on the attainment of certain operating metrics in the periods subsequent to the acquisitions. These earn-out arrangements are accounted for as either contingent considerations arrangements or compensation arrangements. Contingent considerations are fair valued using significant inputs that are not observable in the market.

The earn-outs determined to be compensatory is remeasured each reporting period based on whether the performance targets are probable of being achieved and recognized over the related service periods. For the three and nine months ended September 30, 2022, $15.5 million and $42.9 million, respectively, was recognized as a component of stock-based compensation expense in the accompanying condensed consolidated statements of operations.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Employee Benefit Plans

The Company’s 401(k) policy is a Safe Harbor Plan, whereby the Company matches 100% of the first 3% of eligible compensation and 50% of the next 2% of eligible compensation. Furthermore, the match is immediately vested. Salaries and related expenses include $2.8 million and $1.0 million of employer matching contributions for the three months ended September 30, 2022 and 2021, respectively, and $5.8 million and $2.8 million for the nine months ended September 30, 2022 and 2021.

Letters of Credit

As of September 30, 2022, the Company had a letter of credit totaling $0.9 million as a security deposit for the due performance by the Company of the terms and conditions of a supply contract.

Sales Tax Liabilities

The Company is in the process of finalizing its sales tax liability analysis for states in which it has economic nexus. During the first quarter of 2020, the Company determined it was probable it would be subject to sales tax liabilities, plus applicable interest in these states, and the Company has estimated the potential exposure to range between $2.5 million to $6.3 million. The Company determined that its best estimate of what would be reasonably expected for it to settle the potential exposure was $2.5 million and accordingly, the Company accrued this amount with a corresponding charge to earnings as of March 31, 2020. As of September 30, 2022, there is a $1.1 million accrual balance for sales tax liabilities. The decrease in the balance of this accrual is primarily due to payments made for the sales tax liabilities.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2022

Share-based Payment Arrangement [Abstract]

Stockholders' Equity

Stockholders’ Equity

Common Stock

As of September 30, 2022, there were 200,000,000 shares of common stock authorized, 77,934,440 shares issued, and 75,188,197 shares outstanding. As of December 31, 2021, there were 200,000,000 shares of common stock authorized, 74,980,546 shares issued, and 72,234,303 shares outstanding. The par value for shares of common stock is $0.001 per share.

Preferred Stock

As of September 30, 2022 and December 31, 2021, there were 5,000,000 shares of preferred stock authorized, and no shares were issued or outstanding. The par value for shares of preferred stock is $0.001 per share.

Stock-Based Compensation

Stock Option Plans

The Company’s 2019 Stock Incentive Plan, as amended and restated (the “2019 Plan”), became effective on April 11, 2019. The 2019 Plan allows the Company to grant incentive stock options and restricted stock units to its employees and directors to participate in the Company’s future performance through stock-based awards at the discretion of the board of directors. On April 19, 2021, the Company’s board of directors amended the plan and authorized 5,000,000 new shares for issuance. The number of shares authorized for issuance is 40,067,744 shares in the aggregate. Options to acquire common stock granted thereunder have ten-year terms. As of September 30, 2022, approximately 2.0 million shares of common stock remained available for issuance (taking into account all option exercises and other equity award settlements through September 30, 2022).

Employee Stock Purchase Plan

There are 1,000,000 shares authorized and reserved for issuance under the 2019 Employee Stock Purchase Plan. As of September 30, 2022, approximately 0.5 million shares of common stock remained available for issuance under the 2019 Employee Stock Purchase Plan (taking into account all share purchases through September 30, 2022).

Inducement Plan

There are 6,159,009 shares of common stock authorized and reserved for issuance under the Inducement Plan. As of September 30, 2022, approximately 1.4 million shares of common stock remained available for issuance under the Inducement Plan (taking into account all option exercises and other equity award settlements through September 30, 2022).

Stock Option Activity

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

	Stock Option Activity			Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	Options	Weighted Average Exercise Price
	(In thousands)	(Per share)		(In years)	(In thousands)
Balances outstanding at December 31, 2021	4,782	$	27.52	6.77	$	62,300
Granted	802	22.75
Exercised	(200)	6.27
Cancelled or expired	(870)	38.52
Balances outstanding at September 30, 2022	4,514	25.28		6.58	1,471
Options vested and expected to vest	1,187	31.64		8.48	895
Options exercisable at September 30, 2022	2,680	$	20.67	5.21	$	476

The total fair value of stock options exercised during the nine months ended September 30, 2022 was approximately $7.4 million. As of September 30, 2022, there was approximately $24.8 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of approximately 2.6 years.

Restricted Stock Unit Activity

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

	Restricted Stock Unit Activity
	Number of Shares	Weighted Average Grant Date Fair Value		Aggregate Fair Value
	(In thousands)	(Per share)		(In thousands)
Balances outstanding at December 31, 2021	3,732	$	43.63	$	133,308
Awarded	4,205	19.76
Vested	(1,711)	30.07
Forfeited	(980)	42.43
Non-vested and outstanding at September 30, 2022	5,246	$	29.17	$	49,420
Expected to vest	3,233	$	29.43	$	30,459

RSUs granted to employees generally vest over a three to four-year period or upon achievement of certain performance conditions. As of September 30, 2022, total unrecognized compensation cost, adjusted for estimated forfeitures, related to nonvested RSUs was approximately $130.1 million and the weighted-average remaining vesting period was 2.8 years.

For the three months ended September 30, 2022 and 2021, the Company accrued approximately $0.0 million and $5.1 million in cash rewards, respectively, and for the nine months ended September 30, 2022 and 2021, the Company accrued approximately $11.9 million and $15.5 million in cash awards, respectively, to be settled in shares of the Company’s stock and recorded a corresponding expense, which is included as a component of stock-based compensation expense in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021, respectively.

Stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations and cash flows was $31.9 million and $18.3 million for the three months ended September 30, 2022 and 2021, respectively, and $100.3 million and $48.0 million for the nine months ended September 30, 2022 and 2021, respectively.

The per share weighted average fair value of stock options granted was $7.35 and $29.13 during the three months ended September 30, 2022 and 2021, respectively. The per share weighted average fair value of stock options granted was $11.16 and $26.98 during the nine months ended September 30, 2022 and 2021, respectively. The fair value of each option grant is estimated on the date of grant, adjusted for estimated forfeitures, using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2022	2021	2022	2021
Dividend yield	0.00%	0.00%	0.00%	0.00%
Risk-free interest rate	2.82% - 3.05%	0.72% - 1.02%	1.62% - 3.38%	0.46% - 1.02%
Expected life (in years)	5	5	5	5
Historical volatility	59.74% - 61.22%	53.51% - 53.67%	53.87% - 61.22%	53.51% - 54.55%

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

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

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

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

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

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Restructuring

9 Months Ended

Sep. 30, 2022

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

During the second quarter of 2022, LivePerson began a restructuring initiative to realign the Company’s cost structure to better reflect significant product and business model innovation and changes over the past year due to acquisitions and factors outside the control of the Company. As part of the restructuring initiative, the Company reoriented its global product and engineering organization for greater efficiency and focus, and reallocated some spending to increase its investment in customer success and go-to-market initiatives. The Company believes these initiatives will better align resources to provide further operating flexibility and position the business for long-term success. In connection with the restructuring initiatives, the Company recognized restructuring costs of $7.1 million and $17.9 million, respectively, during the three and nine months ended September 30, 2022, respectively, which is included in restructuring costs in the accompanying condensed consolidated statements of operations. The majority of these costs relate to the Company's Business segment. Such costs primarily include severance and compensation costs.

In 2020, the Company went through a re-evaluation of its real estate needs. In connection with this re-evaluation it was decided in July 2020 that the Company would significantly reduce the real estate space it leases. This decision resulted in the significant reduction of the real estate space the Company leases and the removal of the associated right of use assets. Furthermore, this resulted in various one-time expenses in connection with the abandonment of the majority of the Company’s leased facilities. The lease restructuring costs noted below are a result of this transition to an employee-centric model.

The following table presents the detail of the liability for the Company’s restructuring charges, which is included within accrued expenses and other current liabilities within the accompanying condensed consolidated balance sheet, for the periods presented:

	September 30, 2022		December 31, 2021
	(In thousands)
Balance, beginning of year	$	1,694	$	4,732
Lease restructuring costs	339		724
Severance and other compensation associated costs	17,610		2,673
Cash payments	(13,933)		(6,435)
Balance, end of period	$	5,710	$	1,694

The following table presents the detail of expenses for the Company’s restructuring charges for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Restructuring costs:
Lease restructuring costs	$	—	$	44	$	339	$	594
Severance and other compensation associated costs	7,111		—		17,610		2,675
Total restructuring costs	$	7,111	$	44	$	17,949	$	3,269

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Legal Matters

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Legal Matters

Legal MattersThe Company filed an intellectual property suit against [24]7 Customer, Inc. (“[24]7”) in the Southern District of New York on March 6, 2014 seeking damages on the grounds that [24]7 reverse engineered and misappropriated the Company’s technology to develop competing products and misused the Company’s business information. On June 22, 2015, [24]7 filed suit

against the Company in the Northern District of California alleging patent infringement. On December 7, 2015, [24]7 filed a second patent infringement suit against the Company, also in the Northern District of California. On March 16, 2017, the New York case was voluntarily transferred and consolidated with the two California cases in the Northern District of California (the “Court”) for all pre-trial purposes. Rulings by both the Court and the United States Patent and Trademark Office in the Company’s favor have invalidated the majority of [24]7 patents that were asserted in the patent cases.

The Company believes the remaining claims filed by [24]7 are entirely without merit and intends to defend them vigorously. Trial for the Company’s intellectual property and other claims asserted against [24]7 related to three of the customers at issue occurred on May 24, 2021 and the jury awarded approximately $30.3 million in favor of the Company, including approximately $6.7 million in compensatory damages and approximately $23.6 million in punitive damages. After the jury reached its verdict, additional post-trial motions were filed by [24]7 and LivePerson, including [24]7 asking the Court to order a new trial, overturn the jury’s verdict, or reduce the amount of punitive damages the jury awarded, and LivePerson requested interest on the judgment.

The Company and [24]7 also reached agreement on the terms of a permanent injunction, and that additional costs are owed to the Company in the amount of $0.4 million, which the Court has entered. On July 28, 2022, the Court denied [24]7’s post-trial motions and granted LivePerson’s motion for interest, awarding approximately an additional $4.3 million. On August 26, 2022, [24]7 elected to appeal these matters. Accordingly, no amounts for the judgment have been reflected in the Company’s financial statements. Trial for [24]7’s patent infringement claims has been set for late October 2023 and trial for the Company’s remaining trade secret claims asserted against [24]7 has been set for early March 2024.

From time to time, the Company is involved in or subject to legal, administrative and regulatory proceedings, claims, demands, and investigations arising in the ordinary course of business, including direct claims brought by or against the Company with respect to intellectual property, contracts, employment and other matters, as well as claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In addition, in the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosure related to such matter as appropriate and in compliance with ASC 450, “Contingencies.”

The accruals or estimates, if any, resulting from the foregoing analysis, are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, the Company will, as applicable, adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made. From time to time, third parties assert claims against the Company regarding intellectual property rights, privacy issues, and other matters arising in the ordinary course of business.

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Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are expected to become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

The Company includes interest accrued on the underpayment of income taxes in interest expense and penalties, if any, related to unrecognized tax benefits in general and administrative expenses. The Company recorded a valuation allowance against its U.S. deferred tax asset as it considered its cumulative loss in recent years as a significant piece of negative evidence. Since valuation allowances are evaluated by jurisdiction, the Company believes that the deferred tax assets related to LivePerson Australia Holdings Pty. Ltd., LivePerson (UK) Limited, Kasamba Inc., LivePerson Japan and LivePerson Limited (Israel) are more likely than not to be realized as these jurisdictions have positive cumulative pre-tax book income after

adjusting for permanent and one-time items. During the year ended December 31, 2021, there was an increase in the valuation allowance recorded of $51.7 million.

For the three months ended September 30, 2022, the Company recorded a tax provision of $0.2 million. This amount consists of a tax provision of $0.1 million on operating earnings coupled with a stock compensation tax deficiency of $0.1 million related to stock compensation arrangements of LivePerson, LivePerson (UK) Limited and LivePerson Limited (Israel). For the nine months ended September 30, 2022, the Company recorded a tax provision of $1.3 million. This amount consists of a tax provision of $2.7 million on operating earnings coupled with a stock compensation tax deficiency of $0.2 million related to stock compensation arrangements of LivePerson, LivePerson (UK) Limited and LivePerson Limited (Israel), partially offset by a tax benefit of $1.6 million related to the release of a valuation allowance in conjunction with the WildHealth transaction.

The Company had a valuation allowance on certain deferred tax assets for the year ended December 31, 2021 of $107.1 million. Inherent in the Company’s 2022 annual effective tax rate is an estimated increase in the valuation allowance of $38.1 million, all of which will be recorded as an expense. During 2021, an increase in the valuation allowance in the amount of $34.3 million was recorded as an expense and an additional increase to the valuation allowance of $17.4 million was recorded to goodwill against acquired federal and state net operating losses.

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Equity Method Investments

9 Months Ended

Sep. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Equity Method Investment

On February 13, 2022, the Company and Pasaca Capital Inc. (“Pasaca”) entered into a joint venture agreement (the “JV Agreement”) to form Claire, a joint venture to build, create, and administer a marketplace for health and well-being diagnostic testing. Claire is intended to operate an app store-like platform to make medical testing and accessing results easier and more informative. Claire is being developed with the goal of creating a single place to shop for testing services from numerous testing providers, including Claire-branded tests and at-home tests. Pursuant to the terms of the JV Agreement, the Company agreed to contribute a total of $19.0 million over a five-year period in exchange for a 19.2% ownership interest in Claire. Pasaca agreed to contribute $80.0 million to Claire over a five-year period in exchange for an 80.8% ownership interest in Claire. As of September 30, 2022, $10.6 million remained to be contributed to Claire by the Company under the terms of the JV Agreement. The Company accounts for its 19.2% interest in Claire using the equity method of accounting. The Company recorded its ownership percentage of losses of Claire in Other income (expense), net for $0.6 million and $0.7 million for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2022, the Company’s equity method investment was $4.0 million and was included in investment in joint venture on the condensed consolidated balance sheet.

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Variable Interest Entity

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entity Disclosure

Variable Interest Entities

The Company prepares its condensed consolidated financial statements in accordance with ASC 810, which provides for the consolidation of VIEs of which the Company is the primary beneficiary.

In February 2022, the Company acquired WildHealth as well as certain variable interests that WildHealth has in four Professional Corporations (“PCs”). The PCs are owned by a medical practitioner in accordance with certain state laws which restrict the corporate practice of medicine and require medical practitioners to own such entities. WildHealth provides management and other services to the PCs in exchange for a management fee and provides financial support to the PCs through a revolving credit arrangement. WildHealth also has separate agreements with the equity holder of the PCs where it may acquire and assign such equity interests for certain PCs. WildHealth consolidates the PCs as VIEs. The Company determined that the PCs are VIEs as WildHealth is the primary beneficiary of the PCs.

The assets, liabilities, revenues, and operating results of the VIEs after elimination of intercompany transactions were not material as of and for the three and nine months ended September 30, 2022.

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Related Parties	9 Months Ended
	Sep. 30, 2022
Related Party Transactions [Abstract]
Related Parties	Related PartiesRelated parties are defined as entities related to the Company’s directors or main shareholders as well as equity method affiliates. The Company provides services to Claire, an equity method affiliate (refer to Note 17 – Equity Method Investment for additional information on the equity method affiliate), through the Master Service Agreement (the “MSA”). These services are identified within the MSA’s scope of work and include marketing, end user features, custom software development, and business/management services. Revenues for the services provided to related parties included in the Company’s consolidated statements of operations were $12.9 million and $26.2 million for three and nine months ended September 30, 2022, respectively. Deferred revenues for amounts billed to related parties less recognized revenue included in the Company’s consolidated statements of operations were $20.7 million as of September 30, 2022. Total billings were $34.1 million and accounts receivable were $13.9 million as of September 30, 2022 included in the Company’s condensed consolidated balance sheet.

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Description of Business and Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements, and the financial data and other information disclosed in the notes to the condensed consolidated financial statements as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021 are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for a fair presentation of the Company’s condensed consolidated financial position, results of operations, comprehensive loss, and cash flows for the interim periods presented. The results of operations for any interim period are not necessarily indicative of the results of operations for any other future interim period or for a full fiscal year. The condensed consolidated balance sheet as of December 31, 2021 has been derived from audited consolidated financial statements at that date.

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

Principles of Consolidation

Principles of Consolidation

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

Equity Method Investments

Equity Method Investment

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

Variable Interest Entities

Variable Interest Entities

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

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

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

the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company periodically reassesses whether it is the primary beneficiary of a VIE. See Note 18 – Variable Interest Entities for the Company’s assessment of VIEs.

Use of Estimates

Use of Estimates

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

Significant items subject to such estimates and assumptions include:

•revenue recognition;

•stock-based compensation;

•accounts receivable;

•valuation of goodwill;

•valuation of intangible assets;

•income taxes; and

•legal contingencies.

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

Goodwill

The Company evaluates goodwill for impairment on an annual basis in the third quarter, and more frequently whenever events or substantive changes in circumstances indicate that it is more likely than not that the carrying value of reporting unit exceeds its fair value in accordance with ASC 820, “Fair Value Measurement.” In performing the goodwill impairment test, the Company first assesses qualitative factors to determine the existence of impairment. If the qualitative factors indicate that the carrying value of a reporting unit more likely than not exceeds its fair value, the Company proceeds to a quantitative test to measure the existence and amount, if any, of goodwill impairment. The Company may also choose to bypass the qualitative assessment and proceed directly to the quantitative test.

In performing the quantitative test, impairment loss is recorded to the extent that the carrying value of the reporting unit exceeds its assessed fair value. The Company determines the fair value using the income and market approaches.

Under the income approach, the fair value of a reporting unit is the present value of its future cash flows as viewed from the eyes of a hypothetical market participant in an orderly transaction. These future cash flows are derived from expectations of revenue, expenses, tax deductions and credits, working capital flows, capital expenditures, and other projected sources and uses of cash, as applicable. Value indications are developed by discounting expected cash flows to their present value using a discount rate commensurate with the risks associated with the reporting unit subject to testing.

Under the market approach, the Company uses market multiples derived from comparable companies based on measures salient to investors in those companies.

Foreign Currency Transactions and Translations Policy

Foreign Currency Translation

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

exchange transaction gain or losses are included in other income (expense), net in the accompanying condensed consolidated statements of operations.

Recently Issued Accounting Standards and Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions: In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03 to clarify that a contractual restriction on the sale of an equity security is not considered part of a unit of account of the equity security, and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments also require the following disclosures for equity securities subject to the contractual sale restrictions:

1.The fair value of equity securities subject to the contractual sale restrictions reflected on the balance sheet.

2.The nature and remaining duration of the restriction(s).

3.The circumstances that could cause a lapse in the restriction(s).

This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those financial years. The Company does not expect the adoption of ASU 2022-03 to have a significant impact on its condensed consolidated financial statements.

Recently Adopted Accounting Pronouncements

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

•removing certain conditions required to meet the settlement criterion;

•clarifying that instruments that are not indexed to the issuer’s own stock must be remeasured at fair value through earnings at each reporting period; and

•clarifying the scope of reassessment guidance and disclosure requirements in Subtopic 815-40.

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

For SEC filers, excluding smaller reporting companies, the ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The ASU specifies that the guidance should be adopted as of the beginning of the annual fiscal year. In connection with the adoption of ASU 2020-06, the Company recognized a $50.2 million decrease to accumulated deficit, a $209.7 million decrease to additional paid-in capital, and a $159.4 million increase to convertible senior notes, net. See Note 8 – Convertible Senior Notes, Net and Capped Call Transactions for a description of the convertible senior notes, net on the condensed consolidated balance sheet.

With the exception of the new standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the quarter ended September 30, 2022, that are of significance or potential significance to the Company.

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Revenue from Contract with Customer (Policies)

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition The majority of the Company’s revenue is generated from monthly service revenues, which is inclusive of its platform usage pricing model, and related professional services from the sale of its services. Revenues are recognized when control of these services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those services. No single customer accounted for 10% or more of the Company’s total revenue for the three and nine months ended September 30, 2022 and 2021.

Remaining Performance Obligation

As of September 30, 2022, the aggregate amount of the total transaction price allocated in contracts with original duration of one year or greater to the remaining performance obligations was $430.5 million. Approximately 88% of the Company’s remaining performance obligations is expected to be recognized during the next 24 months, with the balance recognized thereafter. The aggregate balance of unsatisfied performance obligations represents contracted revenue that has not yet been recognized, and does not include contract amounts that are cancellable by the customer, amounts associated with optional renewal periods, and any amounts related to performance obligations, which are billed and recognized as they are delivered.

Deferred Revenues

The Company records deferred revenues when cash payments are received or due in advance of its performance. The increase in the deferred revenue balance as of September 30, 2022 is primarily driven by cash payments received or due in advance of its performance obligations, partially offset by $67.2 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2021.

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Schedule of Deferred Revenues and Contract Balances

The following table presents deferred revenue by revenue source:

	Deferred Revenue
	September 30, 2022		December 31, 2021
	(In thousands)
Hosted services – Business	$	101,113	$	94,107
Hosted services – Consumer	795		870
Professional services – Business	1,311		3,831
Total deferred revenue - short term	$	103,219	$	98,808
Hosted services – Business	171		—
Professional services – Business	$	116	$	54
Total deferred revenue - long term	$	287	$	54

Schedule of Disaggregation of Revenue

The following table presents the Company’s revenues disaggregated by revenue source:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Revenue:
Hosted services – Business	$	89,491	$	93,234	$	290,671	$	271,966
Hosted services – Consumer	9,460		9,123		27,711		27,944
Professional services – Business	30,610		15,970		73,941		45,913
Total revenue	$	129,561	$	118,327	$	392,323	$	345,823

Schedule of Revenue by Geographic Region

The following table presents the Company’s revenues attributable to domestic and foreign operations for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
United States	$	89,619	$	80,096	$	267,189	$	229,802
Other Americas (1)	2,470		4,009		10,484		11,917
Total Americas	92,089		84,105		277,673		241,719
EMEA (2) (4)	16,107		23,399		57,890		68,092
APAC (3)	21,365		10,823		56,760		36,012
Total revenue	$	129,561	$	118,327	$	392,323	$	345,823

—————————————

(1)Canada, Latin America and South America

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

(3)Asia-Pacific (“APAC”)

(4)Includes revenues from the United Kingdom of $13.1 million and $14.3 million for the three months ended September 30, 2022 and 2021, respectively, and from the Netherlands of $1.3 million and $1.2 million for the three months ended September 30, 2022 and 2021, respectively. Includes revenues from the United Kingdom of $41.6 million and $42.4 million for the nine months ended September 30, 2022 and 2021, respectively, and from the Netherlands of $4.8 million and $3.7 million for the nine months ended September 30, 2022 and 2021, respectively.

Schedule Of Receivables, Contract Acquisition Costs, And Deferred Revenue

The opening and closing balances of the Company’s accounts receivable, unbilled receivables, contract acquisition costs, and deferred revenues are as follows (in thousands):

	Accounts Receivable		Unbilled Receivable		Contract Acquisition Costs (Non-current)		Deferred Revenue (Current)		Deferred Revenue (Non-current)
Opening balance as of December 31, 2021	$	69,259	$	24,545	$	40,675	$	98,808	$	54
Increase (decrease), net	5,863		1,074		(772)		4,411		233
Ending balance as of September 30, 2022	$	75,122	$	25,619	$	39,903	$	103,219	$	287

Schedule of Allowance for Uncollectible Accounts

Accounts receivable are written off against the allowance for uncollectible accounts when the Company determines amounts are no longer collectible.

	Allowance for Doubtful Accounts
	(In thousands)
Balance as of December 31, 2021	$	6,338
Additions charged to costs and expenses	4,669
Deductions/write-offs	(2,496)
Balance as of September 30, 2022	$	8,511

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Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

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

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net loss (in thousands)	$	(43,248)	$	(32,807)	$	(184,023)	$	(75,121)
Weighted average number of shares outstanding, basic and diluted	77,784,346		69,798,839		76,969,629		68,926,203
Net loss per share, basic and diluted	$	(0.56)	$	(0.47)	$	(2.39)	$	(1.09)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows:

	As of September 30,
	2022	2021
Shares subject to outstanding common stock options and employee stock purchase plan	4,514,229	4,291,829
Restricted stock units	5,246,300	3,063,156
Fair value of earn-outs	11,996,072	697,133
Conversion option of the 2024 Notes	5,961,186	5,961,186
Conversion option of the 2026 Notes	6,879,283	6,879,283
Total	34,597,070	20,892,587

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Summary of Financial Information by Segment

Summarized financial information by segment for the three months ended September 30, 2022, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	89,491	$	—	$	—	$	89,491
Hosted services – Consumer	—		9,460		—		9,460
Professional services – Business	30,610		—		—		30,610
Total revenue	120,101		9,460		—		129,561
Cost of revenue	42,392		1,289		—		43,681
Sales and marketing	42,826		6,622		—		49,448
Amortization of purchased intangibles	920		—		—		920
Unallocated corporate expenses	—		—		84,026		84,026
Operating income (loss)	$	33,963	$	1,549	$	(84,026)	$	(48,514)

Summarized financial information by segment for the three months ended September 30, 2021, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	93,234	$	—	$	—	$	93,234
Hosted services – Consumer	—		9,123		—		9,123
Professional services – Business	15,970		—		—		15,970
Total revenue	109,204		9,123		—		118,327
Cost of revenue	37,057		1,738		—		38,795
Sales and marketing	34,640		6,212		—		40,852
Amortization of purchased intangibles	488		—		—		488
Unallocated corporate expenses	—		—		58,971		58,971
Operating income (loss)	$	37,019	$	1,173	$	(58,971)	$	(20,779)

Summarized financial information by segment for the nine months ended September 30, 2022, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	290,671	$	—	$	—	$	290,671
Hosted services – Consumer	—		27,711		—		27,711
Professional services – Business	73,941		—		—		73,941
Total revenue	364,612		27,711		—		392,323
Cost of revenue	134,229		4,068		—		138,297
Sales and marketing	148,370		19,193		—		167,563
Amortization of purchased intangibles	2,742		—		—		2,742
Unallocated corporate expenses	—		—		266,669		266,669
Operating income (loss)	$	79,271	$	4,450	$	(266,669)	$	(182,948)

Summarized financial information by segment for the nine months ended September 30, 2021, based on the Company’s internal financial reporting system utilized by the Company’s CODM, follows:

	Business		Consumer		Corporate		Consolidated
	(In thousands)
Revenue:
Hosted services – Business	$	271,966	$	—	$	—	$	271,966
Hosted services – Consumer	—		27,944		—		27,944
Professional services – Business	45,913		—		—		45,913
Total revenue	317,879		27,944		—		345,823
Cost of revenue	106,932		5,445		—		112,377
Sales and marketing	96,758		19,669		—		116,427
Amortization of purchased intangibles	1,237		—		—		1,237
Unallocated corporate expenses	—		—		163,768		163,768
Operating income (loss)	$	112,952	$	2,830	$	(163,768)	$	(47,986)

Schedule of Long-Lived Assets by Geographic Region

The following table presents the Company’s long-lived assets by geographic region as of the dates presented:

	September 30, 2022		December 31, 2021
	(In thousands)
United States	$	476,244	$	444,318
Germany	42,927		52,342
Israel	23,161		20,754
Australia	12,031		12,771
Netherlands	3,320		4,566
Other (1)	13,405		15,629
Total long-lived assets	$	571,088	$	550,380

——————————————

(1)United Kingdom, Japan, France, Italy, Spain, Canada, and Singapore.

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The changes in the carrying amount of goodwill for the nine months ended September 30, 2022 are as follows:

	Business		Consumer		Consolidated
	(In thousands)
Balance as of December 31, 2021	$	283,191	$	8,024	$	291,215
Adjustments to goodwill:
Acquisitions	15,511		—		15,511
Foreign exchange adjustment	(6,148)		—		(6,148)
Balance as of September 30, 2022	$	292,554	$	8,024	$	300,578

During the third quarter of 2022, the Company performed a quantitative analysis to determine whether it was more likely than not that goodwill impairment existed as of the annual impairment test date. As a result of this assessment, the Company concluded that the estimated fair values of each reporting unit exceeded their respective carrying values. Therefore, the Company did not record goodwill impairment for the three and nine months ended September 30, 2022. The Company also did not record goodwill impairment for the three and nine months ended September 30, 2021.

Summary of Intangible Assets

Intangible assets, net, are summarized as follows:

	As of September 30, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Amortization Period
	(In thousands)
Amortizing intangible assets:
Technology	$	97,143	$	(41,938)	$	55,205	5.0 years
Customer relationships	31,795		(16,795)		15,000		10.0 years
Patents	10,234		(1,332)		8,902		12.8 years
Trademarks	1,275		(312)		963		5.0 years
Trade names	1,040		(273)		767		2.8 years
Other	914		(294)		620		4.1 years
Total intangible assets	$	142,401	$	(60,944)	$	81,457

    

	As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Amortization Period
	(In thousands)
Amortizing intangible assets:
Technology	$	90,626	$	(30,757)	$	59,869	5.1 years
Customer relationships	32,162		(15,164)		16,998		10.0 years
Patents	7,988		(1,137)		6,851		11.8 years
Trademarks	1,474		(135)		1,339		5.0 years
Trade names	460		(43)		417		2.1 years
Other	314		(234)		80		2.2 years
Total intangible assets	$	133,024	$	(47,470)	$	85,554

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

stimated annual amortization expense for the next five years and thereafter is as follows:

	Estimated Amortization Expense
	(In thousands)
Remainder of fiscal 2022	$	4,626
2023	17,753
2024	15,965
2025	15,567
2026	12,901
Thereafter	14,645
Total	$	81,457

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Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Summary of Property and Equipment

The following table presents the detail of property and equipment, net for the periods presented:

	September 30, 2022		December 31, 2021
	(In thousands)
Computer equipment and software	$	123,237	$	120,685
Internal-use software development costs	150,831		122,479
Finance lease right of use assets	3,998		6,797
Furniture, equipment, and building improvements	519		258
Property and equipment, at cost	278,585		250,219
Less: accumulated depreciation	(142,755)		(125,493)
Property and equipment, net	$	135,830	$	124,726

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Accrued Expenses and Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

The following table presents the detail of accrued expenses and other current liabilities for the periods presented:

	September 30, 2022		December 31, 2021
	(In thousands)
Professional services and consulting and other vendor fees	$	42,381	$	58,811
Payroll and other employee related costs	22,373		29,855
Short-term contingent earn-out	36,109		—
Sales commissions	2,010		4,269
Finance lease liability	3,412		3,738
Unrecognized tax benefits	2,377		2,424
Restructuring	5,710		1,694
Taxes other than income tax	1,196		918
Other	2,853		2,588
Total accrued expenses and other current liabilities	$	118,421	$	104,297

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Convertible Senior Notes and Capped Call Transactions (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Carrying Amount of Liability Component of Convertible Debt

The net carrying amount of the liability component of the Notes as of September 30, 2022 (post-ASU 2020-06 adoption) and as of December 31, 2021 (pre-ASU 2020-06 adoption) was as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Principal	$	747,500	$	747,500
Unamortized discount	—		(162,960)
Unamortized issuance costs	(11,025)		(10,302)
Net carrying amount	$	736,475	$	574,238

Schedule of Carrying Amount of Equity Component of Convertible Debt

The net carrying amount of the equity component of the Notes as of September 30, 2022 (post-ASU 2020-06 adoption) and as of December 31, 2021 (pre-ASU 2020-06 adoption) was as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Proceeds allocated to the conversion options (debt discount)	$	—	$	215,434
Issuance costs	—		(5,783)
Net carrying amount	$	—	$	209,651

Schedule of Interest Expense Incurred

The following table sets forth the interest expense recognized related to the Notes:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Contractual interest expense	$	431	$	431	$	1,294	$	1,294
Amortization of issuance costs	946		630		2,831		1,858
Amortization of debt discount	—		8,396		—		24,770
Total interest expense	$	1,377	$	9,457	$	4,125	$	27,922

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2022

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the fair value amounts of identifiable assets acquired and liabilities assumed at the acquisition date:

	WildHealth Acquisition
	(In thousands)
Assets acquired
Cash	$	1,353
Other current assets	382
Fixed assets	248
Intangible assets	8,300
Other assets	1,037
Total assets acquired	$	11,320
Liabilities assumed
Current liabilities assumed	$	(1,463)
Deferred tax liabilities	(1,603)
Other liabilities assumed	(1,500)
Total liabilities assumed	(4,566)
Net assets acquired	6,754
Total acquisition consideration	22,265
Goodwill	$	15,511

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination

The following is the breakout of the intangible assets acquired:

	Fair Value		Useful life
	(In thousands)
Amortizing intangible assets:
Developed technology	$	7,100	5.0 years
Trade name	600		5.0 years
Fellowship content	600		5.0 years
Total amortizing intangible assets	$	8,300

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Leases (Tables)

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Supplemental cash flow information related to leases

Supplemental cash flow information related to leases for the periods listed are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,201	$	651	$	3,584	$	1,894
Operating cash flows for finance leases	44		77		162		256
Financing cash flows for finance leases	936		876		2,785		2,604

Schedule of components of lease costs

The components of lease costs for the periods listed are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Finance lease cost
Amortization of right of use assets	$	929	$	908	$	2,762	$	2,696
Interest	44		77		162		256
Operating lease cost	1,211		2,324		5,621		5,805
Total lease cost	$	2,184	$	3,309	$	8,545	$	8,757

	September 30, 2022		September 30, 2021
Weighted Average Remaining Lease Term:
Operating leases	1.5 years		2.7 years
Finance leases	1.3 years		2.1 years
Weighted Average Discount Rate:
Operating leases	7	%	7	%
Finance leases	4	%	4	%

Supplemental balance sheet information related to leases

Supplemental balance sheet information related to leases was as follows:

	Classification on the Condensed Consolidated Balance Sheet	September 30, 2022		December 31, 2021
		(In thousands)
Assets
Operating right of use assets	Operating lease right of use assets	$	2,270	$	1,977
Finance right of use assets	Property and equipment, net	3,998		6,797
Liabilities
Current liabilities:
Operating lease liability	Operating lease liability	$	3,221	$	3,380
Finance lease liability	Accrued expenses and other current liabilities	3,412		3,738
Non-current liabilities:
Operating lease liability	Operating lease liability, net of current portion	$	698	$	2,733
Finance lease liability	Other liabilities	277		2,780

Schedule of Future Minimum Lease Payments

Future minimum lease payments under non-cancellable operating and finance leases (with an initial or remaining lease term in excess of one year) are as follows:

	September 30, 2022
	Operating Leases		Finance Leases
	(In thousands)
2022 (remaining three months at September 30, 2022)	$	1,256	$	980
2023	2,242		2,609
2024	268		109
2025	304		81
2026	127		—
Total minimum lease payments	4,197		3,779
Less: present value adjustment	(278)		(90)
Present value of lease liabilities	$	3,919	$	3,689

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Liabilities Measured at Fair Value

The Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy as of September 30, 2022 and December 31, 2021, are summarized as follows:

	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	321,553	$	—	$	—	$	321,553
Total assets	$	321,553	$	—	$	—	$	321,553
Liabilities
Earn-outs treated as contingent consideration	$	—	$	—	$	23,282	$	23,282
Earn-outs treated as liability awards	—		—		41,843		41,843
Total liabilities	$	—	$	—	$	65,125	$	65,125

	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	416,178	$	—	$	—	$	416,178
Total assets	$	416,178	$	—	$	—	$	416,178
Liabilities
Contingent earn-out	$	—	$	—	$	29,830	$	29,830
Total liabilities	$	—	$	—	$	29,830	$	29,830

Schedule of Changes in Fair Value of Level 3 Liabilities

The changes in fair value of the Level 3 liabilities are as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Balance, beginning of year	$	29,830	$	—
Additions in the period	45,017		29,830
Change in fair value of contingent consideration	(8,568)		—
Change in fair value of liability awards	(1,154)		132
Payments	—		(132)
Balance, end of period	$	65,125	$	29,830

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2022

Share-based Payment Arrangement [Abstract]

Summary of Stock Option Activity and Weighted Average Exercise Prices

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

	Stock Option Activity			Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	Options	Weighted Average Exercise Price
	(In thousands)	(Per share)		(In years)	(In thousands)
Balances outstanding at December 31, 2021	4,782	$	27.52	6.77	$	62,300
Granted	802	22.75
Exercised	(200)	6.27
Cancelled or expired	(870)	38.52
Balances outstanding at September 30, 2022	4,514	25.28		6.58	1,471
Options vested and expected to vest	1,187	31.64		8.48	895
Options exercisable at September 30, 2022	2,680	$	20.67	5.21	$	476

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

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

	Restricted Stock Unit Activity
	Number of Shares	Weighted Average Grant Date Fair Value		Aggregate Fair Value
	(In thousands)	(Per share)		(In thousands)
Balances outstanding at December 31, 2021	3,732	$	43.63	$	133,308
Awarded	4,205	19.76
Vested	(1,711)	30.07
Forfeited	(980)	42.43
Non-vested and outstanding at September 30, 2022	5,246	$	29.17	$	49,420
Expected to vest	3,233	$	29.43	$	30,459

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

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

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2022	2021	2022	2021
Dividend yield	0.00%	0.00%	0.00%	0.00%
Risk-free interest rate	2.82% - 3.05%	0.72% - 1.02%	1.62% - 3.38%	0.46% - 1.02%
Expected life (in years)	5	5	5	5
Historical volatility	59.74% - 61.22%	53.51% - 53.67%	53.87% - 61.22%	53.51% - 54.55%

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Restructuring (Tables)

9 Months Ended

Sep. 30, 2022

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Liability by Cost Type

The following table presents the detail of the liability for the Company’s restructuring charges, which is included within accrued expenses and other current liabilities within the accompanying condensed consolidated balance sheet, for the periods presented:

	September 30, 2022		December 31, 2021
	(In thousands)
Balance, beginning of year	$	1,694	$	4,732
Lease restructuring costs	339		724
Severance and other compensation associated costs	17,610		2,673
Cash payments	(13,933)		(6,435)
Balance, end of period	$	5,710	$	1,694

Schedule of Restructuring and Related Costs

The following table presents the detail of expenses for the Company’s restructuring charges for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Restructuring costs:
Lease restructuring costs	$	—	$	44	$	339	$	594
Severance and other compensation associated costs	7,111		—		17,610		2,675
Total restructuring costs	$	7,111	$	44	$	17,949	$	3,269

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Description of Business and Basis of Presentation (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020
Stockholders' Equity Attributable to Parent	$ 89,511	$ 120,755	$ 180,346	$ 349,437	$ 262,109	$ 261,692	$ 260,017	$ 243,934
Additional Paid-in Capital
Stockholders' Equity Attributable to Parent	757,162	740,132	719,514	871,788	733,202	696,923	674,695	635,672
Accumulated Deficit
Stockholders' Equity Attributable to Parent	(650,638)	$ (607,390)	$ (531,979)	(516,859)	$ (467,006)	$ (434,199)	$ (413,080)	$ (391,885)
Accounting Standards Update 2020-06
Debt Instrument, Increase (Decrease), Net	159,400
Adjustment | Accounting Standards Update 2020-06
Stockholders' Equity Attributable to Parent				(159,407)
Adjustment | Accounting Standards Update 2020-06 | Additional Paid-in Capital
Stockholders' Equity Attributable to Parent	(209,700)			(209,651)
Adjustment | Accounting Standards Update 2020-06 | Accumulated Deficit
Stockholders' Equity Attributable to Parent	$ 50,200			$ 50,244

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Revenue Recognition - Deferred Revenue (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Total deferred revenue - short term	$ 103,219	$ 98,808
Total deferred revenue - long term	287	54
Hosted Services - Business
Disaggregation of Revenue [Line Items]
Total deferred revenue - short term	101,113	94,107
Total deferred revenue - long term	171	0
Hosted Services - Consumer
Disaggregation of Revenue [Line Items]
Total deferred revenue - short term	795	870
Professional Services
Disaggregation of Revenue [Line Items]
Total deferred revenue - short term	1,311	3,831
Total deferred revenue - long term	$ 116	$ 54

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Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Total revenue	$ 129,561	$ 118,327	$ 392,323	$ 345,823
Hosted Services - Business
Disaggregation of Revenue [Line Items]
Total revenue	89,491	93,234	290,671	271,966
Hosted Services - Consumer
Disaggregation of Revenue [Line Items]
Total revenue	9,460	9,123	27,711	27,944
Professional Services
Disaggregation of Revenue [Line Items]
Total revenue	$ 30,610	$ 15,970	$ 73,941	$ 45,913

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Revenue Recognition - Revenue by Geographic Location (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Total revenue	$ 129,561	$ 118,327	$ 392,323	$ 345,823
United States
Disaggregation of Revenue [Line Items]
Total revenue	89,619	80,096	267,189	229,802
Other Americas
Disaggregation of Revenue [Line Items]
Total revenue	2,470	4,009	10,484	11,917
Total Americas
Disaggregation of Revenue [Line Items]
Total revenue	92,089	84,105	277,673	241,719
EMEA
Disaggregation of Revenue [Line Items]
Total revenue	16,107	23,399	57,890	68,092
APAC
Disaggregation of Revenue [Line Items]
Total revenue	21,365	10,823	56,760	36,012
United Kingdom
Disaggregation of Revenue [Line Items]
Total revenue	13,100	14,300	41,600	42,400
Netherlands
Disaggregation of Revenue [Line Items]
Total revenue	$ 1,300	$ 1,200	$ 4,800	$ 3,700

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Revenue Recognition - Receivables and Deferred Revenue (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Contract Balances [Roll Forward]
Accounts receivable, opening balance	$ 93,804
Accounts receivable, ending balance	100,741
Contract acquisition costs noncurrent, opening balance	40,675
Contract acquisition costs noncurrent, increase (decrease), net	(772)
Contract acquisition costs noncurrent, ending balance	39,903
Deferred revenue (current), opening balance	98,808
Deferred revenue (current), increase (decrease), net	4,411
Deferred revenue (current), ending balance	103,219
Deferred revenue (long-term), opening balance	54
Deferred revenue (long-term), increase (decrease), net	233
Deferred revenue (long-term), ending balance	287
Billed receivable
Contract Balances [Roll Forward]
Accounts receivable, opening balance	69,259
Accounts receivable, increase (decrease), net	5,863
Accounts receivable, ending balance	75,122
Unbilled receivable
Contract Balances [Roll Forward]
Accounts receivable, opening balance	24,545
Accounts receivable, increase (decrease), net	1,074
Accounts receivable, ending balance	$ 25,619

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Revenue Recognition - Accounts Receivable (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Allowance for Doubtful Accounts
Beginning balance	$ 6,338
Additions charged to costs and expenses	4,669	$ 2,431
Deductions/write-offs	(2,496)
Ending balance	$ 8,511

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Revenue Recognition - Narrative (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Disaggregation of Revenue [Line Items]
Remaining performance obligation	$ 430,500
Percentage of remaining performance obligations to be recognized over next 24 months	88.00%
Recognition of deferred revenue	$ 67,200

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Net Loss Per Share - Reconciliation of Shares Used in Calculating Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2022	Sep. 30, 2021
Earnings Per Share [Abstract]
Net loss (in thousands)	$ (43,248)	$ (75,411)	$ (65,364)	$ (32,807)	$ (21,119)	$ (21,195)	$ (184,023)	$ (75,121)
Weighted average shares outstanding used in diluted net loss per common share calculation (in shares)	77,784,346			69,798,839			76,969,629	68,926,203
Weighted average shares outstanding used in basic net loss per common share calculation (in shares)	77,784,346			69,798,839			76,969,629	68,926,203
Diluted net loss per common share (in dollars per share)	$ (0.56)			$ (0.47)			$ (2.39)	$ (1.09)
Basic net loss per common share (in dollars per share)	$ (0.56)			$ (0.47)			$ (2.39)	$ (1.09)

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Net Loss Per Share - Schedule of Antidilutive Securities Excluded from Computation of EPS (Details) - shares	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common stock awards not included in earnings per share calculation (in shares)	34,597,070	20,892,587
Shares subject to outstanding common stock options and employee stock purchase plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common stock awards not included in earnings per share calculation (in shares)	4,514,229	4,291,829
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common stock awards not included in earnings per share calculation (in shares)	5,246,300	3,063,156
Conversion option of the Notes | 2024 Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common stock awards not included in earnings per share calculation (in shares)	5,961,186	5,961,186
Conversion option of the Notes | 2026 Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common stock awards not included in earnings per share calculation (in shares)	6,879,283	6,879,283
Fair Value Earnout
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common stock awards not included in earnings per share calculation (in shares)	11,996,072	697,133

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Net Loss Per Share - Narrative (Details) - Convertible Debt - $ / shares	1 Months Ended
	Dec. 31, 2020	Mar. 31, 2019
2024 Notes
Debt Instrument [Line Items]
Threshold percentage of stock price if converted		130.00%
Convertible debt conversion price (in dollars per share)		$ 38.58
2026 Notes
Debt Instrument [Line Items]
Threshold percentage of stock price if converted	130.00%
Convertible debt conversion price (in dollars per share)	$ 75.23

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Segment Information - Financial Information by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Segment Reporting Information [Line Items]
Total revenue	$ 129,561	$ 118,327	$ 392,323	$ 345,823
Cost of revenue	43,681	38,795	138,297	112,377
Sales and marketing	49,448	40,852	167,563	116,427
Amortization of purchased intangibles	920	488	2,742	1,237
Unallocated corporate expenses	84,026	58,971	266,669	163,768
Loss from operations	(48,514)	(20,779)	(182,948)	(47,986)
Corporate
Segment Reporting Information [Line Items]
Total revenue	0	0	0	0
Cost of revenue	0	0	0	0
Sales and marketing	0	0	0	0
Amortization of purchased intangibles	0	0	0	0
Unallocated corporate expenses	84,026	58,971	266,669	163,768
Loss from operations	(84,026)	(58,971)	(266,669)	(163,768)
Business | Operating Segments
Segment Reporting Information [Line Items]
Total revenue	120,101	109,204	364,612	317,879
Cost of revenue	42,392	37,057	134,229	106,932
Sales and marketing	42,826	34,640	148,370	96,758
Amortization of purchased intangibles	920	488	2,742	1,237
Unallocated corporate expenses	0	0	0	0
Loss from operations	33,963	37,019	79,271	112,952
Consumer | Operating Segments
Segment Reporting Information [Line Items]
Total revenue	9,460	9,123	27,711	27,944
Cost of revenue	1,289	1,738	4,068	5,445
Sales and marketing	6,622	6,212	19,193	19,669
Amortization of purchased intangibles	0	0	0	0
Unallocated corporate expenses	0	0	0	0
Loss from operations	1,549	1,173	4,450	2,830
Hosted Services - Business
Segment Reporting Information [Line Items]
Total revenue	89,491	93,234	290,671	271,966
Hosted Services - Business | Corporate
Segment Reporting Information [Line Items]
Total revenue	0	0	0	0
Hosted Services - Business | Business | Operating Segments
Segment Reporting Information [Line Items]
Total revenue	89,491	93,234	290,671	271,966
Hosted Services - Business | Consumer | Operating Segments
Segment Reporting Information [Line Items]
Total revenue	0	0	0	0
Hosted Services - Consumer
Segment Reporting Information [Line Items]
Total revenue	9,460	9,123	27,711	27,944
Hosted Services - Consumer | Corporate
Segment Reporting Information [Line Items]
Total revenue	0	0	0	0
Hosted Services - Consumer | Business | Operating Segments
Segment Reporting Information [Line Items]
Total revenue	0	0	0	0
Hosted Services - Consumer | Consumer | Operating Segments
Segment Reporting Information [Line Items]
Total revenue	9,460	9,123	27,711	27,944
Professional Services
Segment Reporting Information [Line Items]
Total revenue	30,610	15,970	73,941	45,913
Professional Services | Corporate
Segment Reporting Information [Line Items]
Total revenue	0	0	0	0
Professional Services | Business | Operating Segments
Segment Reporting Information [Line Items]
Total revenue	30,610	15,970	73,941	45,913
Professional Services | Consumer | Operating Segments
Segment Reporting Information [Line Items]
Total revenue	$ 0	$ 0	$ 0	$ 0

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Segment Information - Long-Lived Assets by Geographic Region (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Segment Reporting Information [Line Items]
Total long-lived assets	$ 571,088	$ 550,380
United States
Segment Reporting Information [Line Items]
Total long-lived assets	476,244	444,318
Germany
Segment Reporting Information [Line Items]
Total long-lived assets	42,927	52,342
Israel
Segment Reporting Information [Line Items]
Total long-lived assets	23,161	20,754
Australia
Segment Reporting Information [Line Items]
Total long-lived assets	12,031	12,771
Netherlands
Segment Reporting Information [Line Items]
Total long-lived assets	3,320	4,566
Other
Segment Reporting Information [Line Items]
Total long-lived assets	$ 13,405	$ 15,629

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Segment Information - Narrative (Details)	9 Months Ended
	Sep. 30, 2022 segment
Segment Reporting [Abstract]
Number of operating segments	2

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Goodwill and Intangible Assets - Changes in Carrying Amount of Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 291,215
Acquisitions	15,511
Foreign exchange adjustment	(6,148)
Goodwill, ending balance	300,578
Business
Goodwill [Roll Forward]
Goodwill, beginning balance	283,191
Acquisitions	15,511
Foreign exchange adjustment	(6,148)
Goodwill, ending balance	292,554
Consumer
Goodwill [Roll Forward]
Goodwill, beginning balance	8,024
Acquisitions	0
Foreign exchange adjustment	0
Goodwill, ending balance	$ 8,024

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Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 142,401	$ 133,024
Accumulated Amortization		(60,944)	(47,470)
Net Carrying Amount		81,457	85,554
Technology
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount		97,143	90,626
Accumulated Amortization		(41,938)	(30,757)
Net Carrying Amount		$ 55,205	59,869
Weighted Average Amortization Period	5 years 1 month 6 days	5 years
Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 31,795	32,162
Accumulated Amortization		(16,795)	(15,164)
Net Carrying Amount		$ 15,000	16,998
Weighted Average Amortization Period	10 years	10 years
Patents
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 10,234	7,988
Accumulated Amortization		(1,332)	(1,137)
Net Carrying Amount		$ 8,902	6,851
Weighted Average Amortization Period	11 years 9 months 18 days	12 years 9 months 18 days
Trademarks
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 1,275	1,474
Accumulated Amortization		(312)	(135)
Net Carrying Amount		$ 963	1,339
Weighted Average Amortization Period	5 years	5 years
Trade names
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 1,040	460
Accumulated Amortization		(273)	(43)
Net Carrying Amount		$ 767	417
Weighted Average Amortization Period	2 years 1 month 6 days	2 years 9 months 18 days
Other
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 914	314
Accumulated Amortization		(294)	(234)
Net Carrying Amount		$ 620	$ 80
Weighted Average Amortization Period	2 years 2 months 12 days	4 years 1 month 6 days

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Goodwill and Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Estimated Amortization Expense
Remainder of fiscal 2022	$ 4,626
2023	17,753
2024	15,965
2025	15,567
2026	12,901
Thereafter	14,645
Total	$ 81,457	$ 85,554

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Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 4.8	$ 0.9	$ 13.8	$ 2.2

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Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Property and Equipment, Net
Finance lease right of use assets	$ 3,998	$ 6,797
Property and equipment and finance lease, gross	278,585	250,219
Less: accumulated depreciation	(142,755)	(125,493)
Property and equipment, net	135,830	124,726
Computer equipment and software
Property and Equipment, Net
Property and equipment gross	123,237	120,685
Internal-use software development costs
Property and Equipment, Net
Property and equipment gross	150,831	122,479
Furniture, equipment, and building improvements
Property and Equipment, Net
Property and equipment gross	$ 519	$ 258

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Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Payables and Accruals [Abstract]
Professional services and consulting and other vendor fees	$ 42,381	$ 58,811
Payroll and other employee related costs	22,373	29,855
Short-term contingent earn-out	36,109	0
Sales commissions	2,010	4,269
Finance lease liability	3,412	3,738
Unrecognized tax benefits	2,377	2,424
Balance, beginning of year	5,710	1,694	$ 4,732
Taxes other than income tax	1,196	918
Other	2,853	2,588
Total accrued expenses and other current liabilities	$ 118,421	$ 104,297

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Convertible Senior Notes and Capped Call Transactions - Schedule of Carrying Amount of Liability Component of Convertible Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Carrying Amount of Liability Component:
Net carrying amount	$ 736,475	$ 574,238
Convertible Debt | Convertible Senior Notes
Carrying Amount of Liability Component:
Principal	747,500	747,500
Unamortized discount	0	(162,960)
Unamortized issuance costs	$ (11,025)	$ (10,302)

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Convertible Senior Notes and Capped Call Transactions - Schedule of Carrying Amount of Equity Component of Convertible Debt (Details) - Convertible Senior Notes - Convertible Debt - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Proceeds allocated to the conversion options (debt discount)	$ 0	$ 215,434
Issuance costs	0	(5,783)
Net carrying amount	$ 0	$ 209,651

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Convertible Senior Notes and Capped Call Transactions - Schedule of Interest Expense Incurred (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Debt Instrument [Line Items]
Amortization of debt issuance costs			$ 2,831	$ 1,858
Accretion of debt discount on convertible senior notes			0	24,770
Total interest expense	$ 1,400		4,100
Convertible Senior Notes | Convertible Debt
Debt Instrument [Line Items]
Contractual interest expense	431	$ 431	1,294	1,294
Amortization of debt issuance costs	946	630	2,831	1,858
Accretion of debt discount on convertible senior notes	0	8,396	0	24,770
Total interest expense	$ 1,377	$ 9,457	$ 4,125	$ 27,922

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Convertible Senior Notes and Capped Call Transactions - Narrative (Details) $ / shares in Units, shares in Thousands	1 Months Ended		3 Months Ended			9 Months Ended		12 Months Ended
	Dec. 31, 2020 USD ($) day $ / shares shares	Mar. 31, 2019 USD ($) equity_instrument day $ / shares shares	Sep. 30, 2022 USD ($) $ / shares	Mar. 31, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) $ / shares	Sep. 30, 2021 USD ($)	Dec. 31, 2020 USD ($) $ / shares	Dec. 31, 2021 USD ($) $ / shares
Debt Instrument [Line Items]
Common stock, par value (in dollars per share) | $ / shares	$ 0.001	$ 0.001	$ 0.001			$ 0.001		$ 0.001	$ 0.001
Interest expense			$ 1,400,000			$ 4,100,000
Number of shares of common stock covered by called caps (shares) | shares	6,880	5,960
Reduction to additional paid-in-capital related to called caps	$ 46,100,000	$ 23,200,000
Adjustments to additional paid in capital related to issuance costs attributable to equity component				$ 3,700,000
Net carry amount			736,475,000			736,475,000			$ 574,238,000
2024 Notes
Debt Instrument [Line Items]
Carry amount of equity component of convertible notes		52,900,000
Total deferred issuance costs		8,600,000
Debt issuance costs attributable to liability		6,600,000
Adjustments to additional paid in capital related to issuance costs attributable to equity component		$ 2,000,000
Net carry amount			227,500,000			227,500,000
Debt Issuance Costs, Net			2,500,000			2,500,000
2026 Notes
Debt Instrument [Line Items]
Carry amount of equity component of convertible notes									162,500,000
Total deferred issuance costs									12,200,000
Debt issuance costs attributable to liability									8,500,000
Net carry amount			509,000,000			509,000,000
Debt Issuance Costs, Net			$ 8,500,000			$ 8,500,000
Capped calls
Debt Instrument [Line Items]
Capped caps initial strike price (in dollars per share) | $ / shares	$ 75.23	$ 38.58						75.23
Capped caps initial cap price (in dollars per share) | $ / shares	$ 105.58	$ 57.16						$ 105.58
Convertible Debt | 2024 Notes
Debt Instrument [Line Items]
Aggregate principal		$ 230,000,000
Debt instrument stated rate (percent)		0.75%
Aggregate principal from exercise in full of over-allotment options		$ 30,000,000
Proceeds from debt offering, net of debt issuance costs		221,400,000
Debt instrument, unit of principal for conversion		$ 1,000
Number of shares per convertible note | equity_instrument		25.9182
Convertible debt conversion price (in dollars per share) | $ / shares		$ 38.58
Percentage of principal amount paid if repurchase due to fundamental change (percent)		100.00%
Threshold trading days in consideration of note conversion | day		20
Threshold consecutive trading days in analysis of conversion price | day		30
Threshold percentage of stock price if converted		130.00%
Threshold for five day period, product of sale price of common stock and conversion rate of notes		98.00%
Remaining amortization period for debt discount and debt issuance costs						1 year 4 months 24 days
Effective interest rate (percent)			0.0153%			0.0153%
Convertible Debt | 2026 Notes
Debt Instrument [Line Items]
Aggregate principal	$ 517,500,000							$ 517,500,000
Debt instrument stated rate (percent)	0.00%							0.00%
Aggregate principal from exercise in full of over-allotment options	$ 67,500,000							$ 67,500,000
Proceeds from debt offering, net of debt issuance costs								505,300,000
Debt instrument, unit of principal for conversion	$ 1,000							$ 1,000
Number of shares per convertible note	13.2933
Convertible debt conversion price (in dollars per share) | $ / shares	$ 75.23							$ 75.23
Percentage of principal amount paid if repurchase due to fundamental change (percent)	100.00%
Threshold trading days in consideration of note conversion | day	20
Threshold consecutive trading days in analysis of conversion price | day	30
Threshold percentage of stock price if converted	130.00%
Threshold for five day period, product of sale price of common stock and conversion rate of notes	98.00%
Remaining amortization period for debt discount and debt issuance costs						4 years 2 months 12 days
Effective interest rate (percent)			0.004%			0.004%
Convertible Debt | Convertible Senior Notes
Debt Instrument [Line Items]
Carry amount of equity component of convertible notes			$ 0			$ 0			215,434,000
Interest expense			1,377,000		$ 9,457,000	4,125,000	$ 27,922,000
Debt Issuance Costs, Net			$ 11,025,000			$ 11,025,000			$ 10,302,000

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Acquisitions - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	1 Months Ended
	Feb. 28, 2022	Sep. 30, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Goodwill		$ 300,578	$ 291,215
WildHealth
Business Acquisition [Line Items]
Cash	$ 1,353
Other current assets	382
Fixed assets	248
Intangible assets	8,300
Other assets	1,037
Total assets acquired	11,320
Current liabilities assumed	(1,463)
Deferred tax liabilities	(1,603)
Other liabilities assumed	(1,500)
Total liabilities assumed	(4,566)
Net assets acquired	6,754
Total acquisition consideration	22,265
Goodwill	$ 15,511

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Acquisitions - Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination (Details) - WildHealth $ in Thousands	1 Months Ended
	Feb. 28, 2022 USD ($)
Business Acquisition [Line Items]
Intangible assets	$ 8,300
Developed technology
Business Acquisition [Line Items]
Intangible assets	$ 7,100
Useful life	5 years
Trade names
Business Acquisition [Line Items]
Intangible assets	$ 600
Useful life	5 years
Fellowship content
Business Acquisition [Line Items]
Intangible assets	$ 600
Useful life	5 years

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Acquisitions - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended	9 Months Ended
	Feb. 28, 2022	Sep. 30, 2022	Sep. 30, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Goodwill acquired		$ 300,578	$ 300,578	$ 291,215
WildHealth
Business Acquisition [Line Items]
Purchase price	$ 22,265
Cash payment in acquisition	4,600
Equity consideration in acquisition	$ 17,700
Number of shares issued in acquisition	776,825
Value of shares issued in acquisition	$ 20,800
Business Acquisition, Share Price	$ 26.81
Contingent earn out liability	$ 120,000
Cash election restriction percentage	18.00%
Earn-out payments accrued		14,700	38,200
Goodwill acquired	$ 15,511
Intangible assets	8,300
Deferred tax liability for identified intangible assets	1,603
Indemnification assets	$ 1,200
Business acquisition transaction costs		$ 300	$ 300

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Acquisitions - Phantom (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Business Acquisition [Line Items]
General and administrative expense	$ 32,171	$ 17,193	$ 92,152	$ 47,784
WildHealth
Business Acquisition [Line Items]
General and administrative expense	$ 0

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Leases (Supplemental cash flow information related to leases) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Leases [Abstract]
Operating cash flows for operating leases	$ 1,201	$ 651	$ 3,584	$ 1,894
Operating cash flows for finance leases	44	77	162	256
Financing cash flows for finance leases	$ 936	$ 876	$ 2,785	$ 2,604

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Leases (Schedule of components of lease costs) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Leases [Abstract]
Amortization of right of use assets	$ 929	$ 908	$ 2,762	$ 2,696
Interest	44	77	162	256
Operating lease cost	1,211	2,324	5,621	5,805
Total lease cost	$ 2,184	$ 3,309	$ 8,545	$ 8,757
Operating leases, weighted average remaining lease term (in years)	1 year 6 months	2 years 8 months 12 days	1 year 6 months	2 years 8 months 12 days
Finance leases, weighted average remaining lease term (in years)	1 year 3 months 18 days	2 years 1 month 6 days	1 year 3 months 18 days	2 years 1 month 6 days
Operating leases, weighted average discount rate (percent)	7.00%	7.00%	7.00%	7.00%
Finance leases, weighted average discount rate (percent)	4.00%	4.00%	4.00%	4.00%

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Leases (Supplemental balance sheet information related to leases) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
ASSETS
Operating right of use assets	$ 2,270	$ 1,977
Finance right of use assets	3,998	6,797
Current liabilities:
Operating Lease, Liability, Current	3,221	3,380
Finance lease liability	3,412	3,738
Non-current liabilities:
Operating Lease, Liability, Noncurrent	698	2,733
Finance lease liability	$ 277	$ 2,780

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Leases (Schedule of Future Minimum Lease Payments) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Operating Leases
Lessee, Operating Lease, Liability, to be Paid, Remainder of Fiscal Year	$ 1,256
2022	2,242
2023	268
2024	304
2025	127
Total minimum lease payments	4,197
Less: present value adjustment	(278)
Present value of lease liabilities	3,919	$ 6,100
Finance Leases [Abstract]
Finance Lease, Liability, to be Paid, Remainder of Fiscal Year	980
2022	2,609
2023	109
2024	81
2026	0
Total minimum lease payments	3,779
Less: present value adjustment	(90)
Present value of lease liability	$ 3,689

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Leases (Narrative) (Details) $ in Thousands		9 Months Ended
	Jul. 13, 2020 Lease	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Lessee, Lease, Description [Line Items]
Operating lease right of use assets (Note 10)		$ 2,270		$ 1,977
Operating lease, liability		3,919		$ 6,100
Number of leases abandoned | Lease	14
Gain on settlement of leases		0	$ 3,483
Restricted cash in prepaid expenses and other current assets		414	$ 1,480
Israel
Lessee, Lease, Description [Line Items]
Restricted cash in prepaid expenses and other current assets		200
Australia
Lessee, Lease, Description [Line Items]
Restricted cash in prepaid expenses and other current assets		$ 200
Minimum
Leases [Abstract]
Operating leases remaining lease term		1 year
Lessee, Lease, Description [Line Items]
Operating leases remaining lease term		1 year
Maximum
Leases [Abstract]
Operating leases remaining lease term		4 years
Lessee, Lease, Description [Line Items]
Operating leases remaining lease term		4 years

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Fair Value Measurements - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Liabilities
Short-term contingent earn-out	$ 36,109	$ 0
Recurring
Assets
Money market funds	321,553	416,178
Total assets	321,553	416,178
Earn-Outs Treated As Contingent Compensation	23,282
Earn-Outs Treated As Liability Awards	41,843
Liabilities
Total liabilities	65,125	29,830
Recurring | Contingent earn-out
Liabilities
Short-term contingent earn-out	41,843	29,830
Recurring | Level 1
Assets
Money market funds	321,553	416,178
Total assets	321,553	416,178
Earn-Outs Treated As Contingent Compensation	0
Liabilities
Total liabilities	0	0
Recurring | Level 1 | Contingent earn-out
Liabilities
Short-term contingent earn-out	0	0
Recurring | Level 2
Assets
Money market funds	0	0
Total assets	0	0
Earn-Outs Treated As Contingent Compensation	0
Liabilities
Total liabilities	0	0
Recurring | Level 2 | Contingent earn-out
Liabilities
Short-term contingent earn-out	0	0
Recurring | Level 3
Assets
Money market funds	0	0
Total assets	0	0
Earn-Outs Treated As Contingent Compensation	23,282
Earn-Outs Treated As Liability Awards	41,843
Liabilities
Total liabilities	65,125	29,830
Recurring | Level 3 | Contingent earn-out
Liabilities
Short-term contingent earn-out	$ 41,843	$ 29,830

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Fair Value Measurements - Changes in Fair Value of Level 3 Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Contingent earn-out
Change in Fair Value of Level 3 Liabilities
Additions in the period	$ 45,017	$ 29,830
Ending balance		29,830
Contingent earn-out | ebot-7
Change in Fair Value of Level 3 Liabilities
Payments	0	(132)
Contingent earn-out | Tenfold [Member]
Change in Fair Value of Level 3 Liabilities
Ending balance	65,125	29,830
Contingent Consideration
Change in Fair Value of Level 3 Liabilities
Change in fair value of liability awards	(8,568)	0
Contingent Compensation | WildHealth
Change in Fair Value of Level 3 Liabilities
Change in fair value of liability awards	$ (1,154)	$ 132

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Fair Value Measurements - Narrative (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2022 USD ($)
Other Expense
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Employee benefits and share-based compensation	$ 15.5	$ 42.9
Recurring | Convertible senior note
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible senior note net	$ 486.9	$ 486.9

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Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2020
Other Commitments [Line Items]
Employer matching contributions	$ 2.8	$ 1.0	$ 5.8	$ 2.8
Estimated sales tax liability, including interest, minimum					$ 2.5
Estimated sales tax liability, including interest, maximum					6.3
Accrued sales tax, including interest	1.1		1.1		$ 2.5
Letter of Credit | LOC for Security Deposit
Other Commitments [Line Items]
Letters of Credit Outstanding, Amount	$ 0.9		$ 0.9
Match Step One
Other Commitments [Line Items]
Employer matching contribution, percent of match			100.00%
Employer matching contribution percent of eligible compensation			3.00%
Match Step Two
Other Commitments [Line Items]
Employer matching contribution, percent of match			50.00%
Employer matching contribution percent of eligible compensation			2.00%

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Stockholders' Equity - Summary of Stock Option Activity and Weighted Average Exercise Prices (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Options
Beginning balance (in shares)	4,782	4,782
Granted (in shares)		802
Exercised (in shares)		(200)
Cancelled or expired (in shares)		(870)
Ending balance (in shares)		4,514
Options vested and expected to vest (in shares)		1,187
Options exercisable at end of period (in shares)		2,680
Weighted Average Exercise Price
Beginning balance (in dollars per share)	$ 27.52	$ 27.52
Granted (in dollars per share)		22.75
Exercised (in dollars per share)		6.27
Cancelled or expired (in dollars per share)		38.52
Ending balance (in dollars per share)		25.28
Options vested and expected to vest (in dollars per share)		31.64
Options exercisable at end of period (in dollars per share)		$ 20.67
Weighted Average Remaining Contractual Term
Weighted average remaining contract term, Options outstanding	6 years 9 months 7 days	6 years 6 months 29 days
Weighted average remaining contract term, Options vested and expected to vest		8 years 5 months 23 days
Weighted average remaining contract term, Options exercisable		5 years 2 months 15 days
Aggregate Intrinsic Value
Aggregate intrinsic value, Options outstanding		$ 1,471	$ 62,300
Aggregate intrinsic value, Options vested and expected to vest		895
Aggregate intrinsic value, Options exercisable		$ 476

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Stockholders' Equity - Summary of Restricted Stock Unit Activity and Weighted Average Exercise Price (Details) - RSUs - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Number of Shares
Beginning balance outstanding (in shares)	3,732
Awarded (in shares)	4,205
Vested (in shares)	(1,711)
Forfeited (in shares)	(980)
Non-vested and outstanding at end of period (in shares)	5,246
Expected to vest (in shares)	3,233
Weighted Average Grant Date Fair Value (usd per share)
Beginning balance outstanding (in dollars per share)	$ 43.63
Awarded (in dollars per share)	19.76
Vested (in dollars per share)	30.07
Forfeited (in dollars per share)	42.43
Non-vested and outstanding at end of period (in dollars per share)	29.17
Expected to vest (in dollars per share)	$ 29.43
Aggregate Fair Value
Aggregate fair value, Non-vested and outstanding	$ 49,420	$ 133,308
Aggregate fair value, Expected to vest	$ 30,459

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Stockholders' Equity - Weighted Average Assumptions of Fair Value Options Using Black-Scholes Option-Pricing Model (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Option-Pricing Model Weighted Average Assumptions
Dividend yield (percent)	0.00%	0.00%	0.00%	0.00%
Risk-free interest rate, minimum (percent)	2.82%	0.72%	1.62%	0.46%
Risk-free interest rate, maximum (percent)	3.05%	1.02%	3.38%	1.02%
Expected life (in years)	5 years	5 years	5 years	5 years
Historical volatility, minimum (percent)	59.74%	53.51%	53.87%	53.51%
Historical volatility, maximum (percent)	61.22%	53.67%	61.22%	54.55%

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Stockholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Apr. 19, 2021	Dec. 31, 2020	Mar. 31, 2019
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract]
Common stock, authorized (in shares)	200,000,000		200,000,000		200,000,000
Common stock, issued (in shares)	77,934,440		77,934,440		74,980,546
Common stock, outstanding (in shares)	75,188,197		75,188,197		72,234,303
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001		$ 0.001		$ 0.001	$ 0.001
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract]
Preferred stock, authorized (in shares)	5,000,000		5,000,000		5,000,000
Preferred stock, issued (in shares)	0		0		0
Preferred stock, shares outstanding (in shares)	0		0		0
Preferred stock, par value (in dollars per share)	$ 0.001		$ 0.001		$ 0.001
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, authorized (in shares)	200,000,000		200,000,000		200,000,000
Common stock, issued (in shares)	77,934,440		77,934,440		74,980,546
Common stock, outstanding (in shares)	75,188,197		75,188,197		72,234,303
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001		$ 0.001		$ 0.001	$ 0.001
Preferred stock, authorized (in shares)	5,000,000		5,000,000		5,000,000
Preferred stock, shares outstanding (in shares)	0		0		0
Preferred stock, issued (in shares)	0		0		0
Preferred stock, par value (in dollars per share)	$ 0.001		$ 0.001		$ 0.001
Fair value of stock options exercised			$ 7.4
Accrual for cash awards	$ 0.0	$ 5.1	11.9	$ 15.5
Stock-based compensation expense	$ 31.9	$ 18.3	$ 100.3	$ 48.0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 7.35	$ 29.13	$ 11.16	$ 26.98
Dividend yield (percent)	0.00%	0.00%	0.00%	0.00%
Expected life (in years)	5 years	5 years	5 years	5 years
Period used to determine volatility			5 years
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock available for issuance (up to)	40,067,744		40,067,744			5,000,000
Options term (in years)			10 years
Shares reserved for future issuance	2,000,000		2,000,000
Unrecognized compensation cost related to novested share-based compensation arrangements	$ 24.8		$ 24.8
Weighted average recognition period of unrecognized compensation cost			2 years 7 months 6 days
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock available for issuance (up to)	1,000,000		1,000,000
Shares reserved for future issuance	500,000		500,000
Incentive Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock available for issuance (up to)	6,159,009		6,159,009
Shares reserved for future issuance	1,400,000		1,400,000
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average recognition period of unrecognized compensation cost			2 years 9 months 18 days
Unrecognized compensation cost related to nonvested share-based compensation arrangements	$ 130.1		$ 130.1
Minimum | RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Maximum | RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			4 years

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Restructuring - Schedule of Restructuring Liability by Cost Type (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2022	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Restructuring and Related Activities [Abstract]
Balance, beginning of year		$ 5,710	$ 1,694	$ 4,732
Lease restructuring costs	$ 724	339
Severance and other compensation associated costs	2,673	17,610
Cash payments	$ (6,435)	(13,933)
Balance, end of period		$ 5,710

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Restructuring - Schedule of Restructuring and Related Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 7,111	$ 44	$ 17,949	$ 3,269
Lease restructuring costs
Restructuring Cost and Reserve [Line Items]
Restructuring costs	0	44	339	594
Severance and other compensation associated costs
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 7,111	$ 0	$ 17,610	$ 2,675

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Restructuring - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020
Restructuring and Related Activities [Abstract]
Restructuring expense	$ 7,111	$ 44	$ 17,949	$ 3,269
Restructuring liability	$ 5,710		$ 5,710		$ 1,694	$ 4,732

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Legal Matters (Details) - USD ($) $ in Millions		3 Months Ended
	May 24, 2021	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Litigation settlement, amount awarded from other party	$ 30.3
Compensatory damages	6.7
Punitive damages	23.6
Loss contingency, additional costs owed	$ 0.4
Loss contingency, additional amount awarded		$ 4.3

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Income Tax Contingency [Line Items]
Increase in valuation recorded		$ 17,400
Provision for income taxes	$ 249		$ 2,538	$ 1,270	$ 2,285
Income tax provision on operating income	100			2,700
Income tax benefit from settlement of uncertain tax benefits	$ 100			200
Valuation allowance						$ 107,100
Increase in valuation allowance recorded as an expense		34,300		38,100
Foreign Tax Authority
Income Tax Contingency [Line Items]
Increase in valuation recorded		$ 51,700
Income tax benefit from settlement of uncertain tax benefits				$ (1,600)

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Equity Method Investments (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
	Feb. 13, 2022	Sep. 30, 2022	Sep. 30, 2022	Dec. 31, 2021
Schedule of Equity Method Investments [Line Items]
Investment in joint venture		$ 3,993	$ 3,993	$ 0
Claire Holdings, Inc.
Schedule of Equity Method Investments [Line Items]
Payments to acquire equity method investments	$ 19,000
Ownership percentage	19.20%
Due to Claire		10,600	10,600
Other operating income (expense), net		$ 600	$ 700
Claire Holdings, Inc. | Pasaca Capital Inc. (“Pasaca”)
Schedule of Equity Method Investments [Line Items]
Payments to acquire equity method investments	$ 80,000
Ownership percentage	80.80%

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Related Parties (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2022 USD ($)
Related Party Transactions [Abstract]
Revenue from related parties	$ 12.9	$ 26.2
Related Party Transaction, Other Revenues from Transactions with Related Party		20.7
Accounts Receivable, Related Parties	13.9	13.9
Due from Related Parties	$ 34.1	$ 34.1

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Label	Element	Value
Contingent Earn-Out [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationsRecurringBasisLiabilityValue	$ 0