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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, 2021
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)
Delaware13-3861628
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareLPSNThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated Filer
Non-accelerated FilerSmaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
On October 29, 2021, 70,763,137 shares of the registrant’s common stock were outstanding.
1


LIVEPERSON, INC.
September 30, 2021
FORM 10-Q
INDEX
PAGE
   
Item 1.
   
 
as of September 30, 2021 and December 31, 2020
   
 
for the Three and Nine Months Ended September 30, 2021 and 2020
   
 
for the Three and Nine Months Ended September 30, 2021 and 2020
   
for the Three and Nine Months Ended September 30, 2021 and 2020
   
 
for the Nine Months Ended September 30, 2021 and 2020
 
   
Item 2.
   
Item 3.
   
Item 4.
   
   
Item 1.
   
Item 1A.
   
Item 2.
   
Item 3.
   
Item 4.
   
Item 5.
   
Item 6.

2


FORWARD-LOOKING STATEMENTS
 
Statements in this Quarterly Report on Form 10-Q about LivePerson, Inc. (“LivePerson”) that are not historical facts are forward-looking statements. These forward-looking statements are based on our current expectations, assumptions, estimates and projections about LivePerson and our industry. Our expectations, assumptions, estimates and projections are expressed in good faith, and we believe there is a reasonable basis for them, but we cannot assure you that our expectations, assumptions, estimates and projections will be realized. Examples of forward-looking statements include, but are not limited to, statements regarding future business, future results of operations or financial condition (including based on examinations of historical operating trends), management strategies and the COVID-19 pandemic. Many of these statements are found in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Quarterly Report on Form 10-Q. When used in this Quarterly Report on Form 10-Q, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes” and variations of such words or similar expressions are intended to identify forward-looking statements. However, not all forward-looking statements contain these words. Forward-looking statements are subject to risks and uncertainties that could cause actual future events or results to differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q include those set forth in our Annual Report on Form 10-K filed with the SEC on March 8, 2021 in the section entitled “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,
2021
December 31,
2020
(In thousands)
ASSETS  
Current assets:  
Cash and cash equivalents$633,042 $654,152 
Accounts receivable, net of allowances of $5,601 and $5,344 as of September 30, 2021 and December 31, 2020, respectively
83,160 80,423 
Prepaid expenses and other current assets26,489 14,236 
Total current assets742,691 748,811 
Operating lease right of use assets (Note 10)
1,957 614 
Property and equipment, net (Note 6)
118,726 106,055 
Contract acquisition costs43,705 41,021 
Intangibles, net (Note 5)
18,134 10,927 
Goodwill (Note 5)
139,149 95,192 
Deferred tax assets3,534 2,032 
Other assets1,013 1,780 
Total assets$1,068,909 $1,006,432 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$14,599 $14,115 
Accrued expenses and other current liabilities (Note 7)
105,596 99,870 
Deferred revenue (Note 2)
102,905 88,848 
Operating lease liability (Note 10)
3,257 5,718 
Total current liabilities226,357 208,551 
Deferred revenue, net of current portion (Note 2)
179 409 
Convertible senior notes, net (Note 8)
565,059 538,432 
Operating lease liability, net of current portion (Note 10)
3,415 7,180 
Deferred tax liability1,995 1,622 
Other liabilities9,795 6,304 
Total liabilities806,800 762,498 
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, 72,723,049 and 70,264,265 shares issued, 70,013,219 and 67,554,435 shares outstanding as of September 30, 2021 and December 31, 2020, respectively
73 70 
Additional paid-in capital733,202 635,672 
Treasury stock - 2,709,830 shares
(3)(3)
Accumulated deficit(467,006)(391,885)
Accumulated other comprehensive (loss) income(4,157)80 
Total stockholders’ equity262,109 243,934 
Total liabilities and stockholders equity
$1,068,909 $1,006,432 
See accompanying notes to condensed consolidated financial statements.
4


LIVEPERSON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
    
Three Months EndedNine Months Ended
September 30,September 30,
 2021202020212020
(In thousands, except share and per share amounts)
Revenue$118,327 $94,804 $345,823 $264,495 
Costs and expenses: (1) (2)
  
Cost of revenue (3)
38,795 27,692 112,377 78,218 
Sales and marketing40,852 32,775 116,427 110,073 
General and administrative17,193 14,891 47,784 47,713 
Product development41,734 27,736 112,715 80,417 
Restructuring costs44 26,442 3,269 29,635 
Amortization of purchased intangibles488 411 1,237 1,219 
Total costs and expenses139,106 129,947 393,809 347,275 
Loss from operations(20,779)(35,143)(47,986)(82,780)
Other (expense) income, net:
Interest expense, net(9,442)(3,159)(27,852)(9,161)
Other (expense) income, net(48)(508)3,002 (2,484)
Total other expense, net(9,490)(3,667)(24,850)(11,645)
Loss before provision for (benefit from) income taxes(30,269)(38,810)(72,836)(94,425)
Provision for (benefit from) income taxes2,538 (100)2,285 (87)
Net loss$(32,807)$(38,710)$(75,121)$(94,338)
Net loss per share of common stock:
Basic $(0.47)$(0.58)$(1.09)$(1.44)
Diluted $(0.47)$(0.58)$(1.09)$(1.44)
Weighted-average shares used to compute net loss per share:
Basic 69,798,839 66,451,414 68,926,203 65,504,571 
Diluted69,798,839 66,451,414 68,926,203 65,504,571 
(1)Amounts include stock-based compensation expense, as follows:
Cost of revenue $1,337 $2,288 $4,618 $5,735 
Sales and marketing 4,228 1,873 11,383 9,536 
General and administrative 4,103 3,618 9,863 10,428 
Product development 8,601 7,753 22,103 20,472 
(2)Amounts include depreciation expense, as follows:
Cost of revenue $2,552 $2,710 $7,720 $7,619 
Sales and marketing 602 511 1,820 1,798 
General and administrative 15 53 103 207 
Product development 3,724 2,674 10,828 7,599 
(3)Amounts include amortization of purchased intangibles, as follows:
Cost of revenue $1,343 $286 $3,702 $854 
See accompanying notes to condensed consolidated financial statements.
5


LIVEPERSON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)

Three Months EndedNine Months Ended
September 30,September 30,
 2021202020212020
(In thousands)
Net loss$(32,807)$(38,710)$(75,121)$(94,338)
Foreign currency translation adjustment(3,056)2,292 (4,237)1,754 
Comprehensive loss$(35,863)$(36,418)$(79,358)$(92,584)
See accompanying notes to condensed consolidated financial statements.

6


LIVEPERSON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
Common StockTreasury StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
SharesAmountSharesAmountTotal
(In thousands, except share data)
Balance as of December 31, 202070,264,265 $70 (2,709,830)$(3)$635,672 $(391,885)$80 $243,934 
Common stock issued upon exercise of stock options209,185 — — — 2,617 — — 2,617 
Common stock issued upon vesting of restricted stock units (RSU)454,508 1 — — (1)— —  
Stock-based compensation— — — — 9,225 — — 9,225 
Cash awards settled in shares of the Company's common stock400,700 — — — 25,925 — — 25,925 
Common stock issued under Employee Stock Purchase Plan22,544 — — — 1,257 — — 1,257 
Net loss— — — — — (21,195)— (21,195)
Other comprehensive loss— — — — — (1,746)(1,746)
Balance as of March 31, 202171,351,202 $71 (2,709,830)$(3)$674,695 $(413,080)$(1,666)$260,017 
Common stock issued upon exercise of stock options252,155 — — — 3,999 — — 3,999 
Common stock issued upon vesting of RSU252,218 1 — — (1)— —  
Stock-based compensation— — — — 9,524 — — 9,524 
Cash awards settled in shares of the Company's common stock137,300 — — — 7,578 — — 7,578 
Common stock issued under Employee Stock Purchase Plan24,270 — — — 1,128 — — 1,128 
Net loss— — — — — (21,119)— (21,119)
Other comprehensive loss— — — — — — 565 565 
Balance as of June 30, 202172,017,145 $72 (2,709,830)$(3)$696,923 $(434,199)$(1,101)$261,692 
Common stock issued upon exercise of stock options191,693 — — — 3,036 — — 3,036 
Common stock issued upon vesting of RSU142,867 — — — — — —  
Issuance of common stock in connection with acquisitions (Note 9)
351,462 1 — — 20,012 — — 20,013 
Stock-based compensation— — — — 12,148 — — 12,148 
Common stock issued under Employee Stock Purchase Plan19,882 — — — 1,083 — — 1,083 
Net loss— — — — — (32,807)— (32,807)
Other comprehensive loss— — — — — — (3,056)(3,056)
Balance as of September 30, 202172,723,049 $73 (2,709,830)$(3)$733,202 $(467,006)$(4,157)$262,109 
See accompanying notes to condensed consolidated financial statements.
7


Common StockTreasury StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
SharesAmountSharesAmountTotal
(In thousands, except share data)
Balance as of December 31, 201966,543,073 $67 (2,709,830)$(3)$436,557 $(283,562)$(4,524)$148,535 
Common stock issued upon exercise of stock options199,215 — — — 1,955 — — 1,955 
Common stock issued upon vesting of RSU203,690 — — — — — —  
Common stock as earn-out payment in connection with AdvantageTec Inc.11,508 1 — — 293 — — 294 
Stock-based compensation— — — — 9,519 — — 9,519 
Cash awards settled in shares of the Company's common stock991,905 — — — 24,656 — — 24,656 
ASU 2016-13 (Topic 326) Adjustment (Note 1)— — — — — (729)— (729)
Common stock issued under Employee Stock Purchase Plan50,818 — — — 1,626 — — 1,626 
Net loss— — — — — (37,001)— (37,001)
Other comprehensive loss— — — — — — (2,469)(2,469)
Balance as of March 31, 202068,000,209 $68 (2,709,830)$(3)$474,606 $(321,292)$(6,993)$146,386 
Common stock issued upon exercise of stock options403,443 — — — 5,079 — — 5,079 
Common stock issued upon vesting of RSU298,114 1 — — — — — 1 
Stock-based compensation— — — — 7,433 — — 7,433 
Common stock issued under Employee Stock Purchase Plan29,711 — — — 1,111 — — 1,111 
Net loss— — — — — (18,627)— (18,627)
Other comprehensive loss— — — — — — 1,931 1,931 
Balance as of June 30, 202068,731,477 $69 (2,709,830)$(3)$488,229 $(339,919)$(5,062)$143,314 
Common stock issued upon exercise of stock options544,693 — — — 7,072 — — 7,072 
Common stock issued upon vesting of RSU162,346 — — — — — —  
Stock-based compensation— — — — 9,423 — — 9,423 
Common stock issued under Employee Stock Purchase Plan18,783 — — — 304 — — 304 
Net loss— — — — — (38,710)— (38,710)
Other comprehensive loss— — — — — — 2,292 2,292 
Balance as of September 30, 202069,457,299 $69 (2,709,830)$(3)$505,028 $(378,629)$(2,770)$123,695 
See accompanying notes to condensed consolidated financial statements.
8


LIVEPERSON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)    
Nine Months Ended
September 30,
 20212020
(In thousands)
OPERATING ACTIVITIES:  
Net loss$(75,121)$(94,338)
Adjustments to reconcile net loss to net cash provided by operating activities:  
Stock-based compensation expense47,967 46,171 
Depreciation20,471 17,223 
Non-cash restructuring costs 19,085 
Amortization of purchased intangibles and finance leases4,939 2,073 
Amortization of debt issuance costs1,858 908 
Accretion of debt discount on convertible senior notes24,770 7,227 
Changes in fair value of contingent consideration (263)
Allowance for credit losses2,431 2,627 
Gain on settlement of leases(3,483) 
Deferred income taxes(1,129)47 
Changes in operating assets and liabilities: 
Accounts receivable(5,827)19,231 
Prepaid expenses and other current assets(10,269)(6,055)
Contract acquisition costs noncurrent(4,765)(8,156)
Other assets741 (35)
Accounts payable(354)(4,572)
Accrued expenses and other current liabilities22,176 36,904 
Deferred revenue14,925 (164)
Operating lease liabilities(4,018)(287)
Other liabilities330 29 
Net cash provided by operating activities35,642 37,655 
INVESTING ACTIVITIES:  
Purchases of property and equipment, including capitalized software(33,821)(32,904)
Payments for acquisition, net of cash acquired(23,014) 
Repayment of debt acquired in acquisition(1,955) 
Payments for intangible assets(1,931)(1,259)
Net cash used in investing activities(60,721)(34,163)
FINANCING ACTIVITIES:  
Principal payments for financing leases(2,604) 
Proceeds from issuance of common stock in connection with the exercise of options and ESPP13,127 17,147 
Payments on conversion of convertible senior notes(2) 
Net cash provided by financing activities10,521 17,147 
Effect of foreign exchange rate changes on cash and cash equivalents(5,072)1,532 
Net increase (decrease) in cash, cash equivalents, and restricted cash(19,630)22,171 
Cash, cash equivalents, and restricted cash - beginning of year654,152 176,523 
Cash, cash equivalents, and restricted cash - end of year$634,522 $198,694 
9


Nine Months Ended
September 30,
 20212020
(In thousands)
Reconciliation of cash, cash equivalents, and restricted cash to condensed consolidated balance sheets
Cash and cash equivalents$633,042 $198,694 
Restricted cash in prepaid expenses and other current assets1,480  
Total cash, cash equivalents, and restricted cash$634,522 $198,694 
Supplemental disclosure of other cash flow information:
Cash paid for income taxes$2,219 $4,321 
Cash paid for interest1,981 1,843 
Supplemental disclosure of non-cash investing and financing activities:
Purchase of property and equipment recorded in accounts payable$581 $1,273 
Issuance of 11,508 shares of common stock as earn-out payment in connection with AdvantageTec Inc.
 294 
Issuance of shares of common stock to settle cash awards33,503 24,656 
Right of use assets obtained in exchange for operating lease liabilities1,856  
Supplemental disclosure of non-cash financing activities related to the e-bot7 acquisition:
Issuance of 351,462 shares of common stock
20,012  
Fair value of contingent earn-out recorded in other long-term liabilities6,026  
See accompanying notes to 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”) makes life easier for people and brands everywhere through trusted Conversational AI. Conversational AI allows humans and machines to interact using natural language, including speech or text. During the past decade, consumers have made mobile devices the center of their digital lives, and they have made mobile messaging the center of communication with friends, family and peers. This trend has been significantly accelerated by the COVID-19 pandemic and can now be viewed as a permanent, structural shift in consumer behavior. 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 Artificial Intelligence (“AI”) to power convenient, personalized, and content-rich journeys across the entire consumer lifecycle, from discovery and research, to sales, service and support, and increasingly marketing, social, and brick and mortar engagements. 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, LivePerson'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, short message service (“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, cobrowsing, 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 LivePerson 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 our proprietary Conversational AI, as well as third-party bots, the Conversational Cloud offers brands a comprehensive approach to scaling automations across their millions of customer conversations.

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

LivePerson was incorporated in the State of Delaware in November 1995 and the LivePerson service was introduced in November 1998. In April 2000, the Company completed an initial public offering and is currently traded on the NASDAQ Global Select Market and the Tel Aviv Stock Exchange. LivePerson is headquartered in New York City. In light of the COVID-19 pandemic and the Company’s strong performance working remotely, the Company 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 as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the consolidated financial position of LivePerson as of September 30, 2021, and the consolidated results of operations, comprehensive loss, and cash flows for the interim periods ended September 30, 2021 and 2020. The financial data and other information disclosed in these notes to the condensed consolidated financial statements related to these periods are unaudited. The results of operations for any interim period are not necessarily indicative of the results of operations for any other future interim period or for a full fiscal year. The condensed consolidated balance sheet as of December 31, 2020 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, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2021.

Principles of Consolidation

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

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the condensed consolidated financial statements; therefore, actual results could differ from management’s estimates.

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

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 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 income (loss) in stockholders’ equity. Foreign exchange transaction gain or losses are included in Other income (expense), net in the accompanying consolidated statements of operations.

Recently Issued Accounting Standards

Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06 which simplifies the accounting for convertible instruments by eliminating existing accounting models that require separation of a cash conversion or beneficial conversion feature from the host contract. Accordingly, a convertible debt instrument will be accounted as a single liability measured at its amortized cost and a convertible preferred stock will be accounted as a single equity instrument measured at its historical cost, as long as no other embedded features require bifurcation as derivatives and
12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)





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
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. The Company is assessing what impact ASU 2020-06 will have on its condensed consolidated financial statements.     

Recently Adopted Accounting Pronouncements

Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued ASU 2019-12, which is intended to simplify the accounting for income taxes by removing certain exceptions and by updating accounting requirements around franchise taxes, goodwill recognized for tax purposes, the allocation of current and deferred tax expenses among legal entities, among other minor changes. The ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2019-12 in the first quarter of 2021 and determined that the ASU had no material impact on its condensed consolidated financial statements.

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 its total revenue for the nine months ended September 30, 2021.

Remaining Performance Obligation

As of September 30, 2021, the aggregate amount of the total transaction price allocated in contracts with original duration of greater than one year to the remaining performance obligations was $370.3 million. Approximately 92% 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 our performance. The increase in the deferred revenue balance as of September 30, 2021 is primarily driven by cash payments received or due in advance of its performance obligations, partially offset by $70.5 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2020.

13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)





The following table presents deferred revenue by revenue source:
Deferred Revenue
September 30,
2021
December 31,
2020
(In thousands)
Hosted services – Business$100,694 $86,144 
Hosted services – Consumer883 835 
Professional services – Business1,328 1,869 
Total deferred revenue - short term$102,905 $88,848 
Professional services – Business179 409 
Total deferred revenue - long term$179 $409 
    
Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue source:
Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
(In thousands)
Revenue:
Hosted services – Business$93,234 $74,396 $271,966 $207,832 
Hosted services – Consumer9,123 7,881 27,944 21,707 
Professional services – Business15,970 12,527 45,913