LivePerson, Inc. (LPSN)
provides online software applications that enable businesses to interact in real time with their customers via the Internet. (If you’ve ever asked an online question in real time to a business’s customer-service representative, there’s a good chance that you did so via a LivePerson application).
Specifically, the company’s cloud-based applications enable businesses to provide real-time assistance and expert advice to their current and/or prospective customers. By doing so, LivePerson’s products help businesses to maximize their customers’ satisfaction and retention, and, in turn, to increase sales.
The company manages a unique set of online consumer behavioral data on behalf of its customers, spanning the breadth of an online visitor session from an initial keyword search through a business’s web site and into the shopping cart and an executed sale. That data enables LivePerson to develop unique insights into consumer behavior during specific transactions.
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In response to the rapidly growing use of electronic mobile devices and online social networking sites, LivePerson plans to expand its behavioral intelligence and data capabilities to provide additional services for businesses to connect with their customers and to use the company’s applications to analyze their customers’ behavioral patterns.
More than 8,500 companies rely on LivePerson’s applications to foster deeper connections with their customers, including Sears, Hewlett-Packard, IBM, Microsoft, Verizon, Walt Disney, QVC, and Orbitz.
The company was named as one of America's 25 Fastest-Growing Tech Companies by Forbes Magazine, and as Company of the Year by Frost and Sullivan.
LivePerson is headquartered in New York City with offices in San Francisco, Tel Aviv, Atlanta, London and Melbourne, Australia.
LivePerson has consistently grown its revenues since the company went public on April 6, 2000, with those revenues rising to $109.9 million during the year ended Dec. 31, 2010, from $6.3 million at the end of 2000.
After substantially reducing its losses during each of the three years following the company’s IPO, LivePerson grew its earnings to 12 cents per diluted share during the year ended Dec. 31, 2007, from 5 cents per diluted shares during 2004.
Although the company incurred a loss of 50 cents per diluted share during the 2008 recession, it returned to profitability during 2009 and then grew those earnings by 12.5 percent during the year ended Dec. 31, 2010, to 18 cents per diluted share from 16 cents per diluted share, on a 26 percent increase in the company’s revenues.
LivePerson continued to grow its revenues and earnings during the first two quarters of this year. Specifically, the company’s earnings rose at a year-over-year rate of 33 percent and 50 percent during the second and first quarters of this year, respectively, on revenue increases of approximately 20 percent during each of those quarters.
Increasing Revenues and Earnings
Looking forward, I expect LivePerson to also grow its revenues and earnings at a rapid pace during the years ahead. As a provider of cloud-computing, software-as-a-service (SaaS) applications, LivePerson provides its services on a hosted basis. That 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. Hence, organizations that use LivePerson’s applications are able to eliminate the time, server infrastructure costs, and IT resources required to implement, maintain, and support traditional on-premise software.
According to IT research firm Gartner, Inc., 90 percent of all e-commerce sites will rely on at least one SaaS application within the next two years, while 40 percent of those sites will rely entirely on SaaS applications by the end of 2013.
Separately, IT and market research firm Forrester Research estimates that online retail sales in the United States will rise to approximately $250 billion by the end of 2014, from $173 billion at the end of 2010 — at an annual average compounded rate of approximately 9.7 percent. In Western Europe, Forrester expects online retail sales to grow at an average annual rate of 11 percent over the next three years.
Forrester estimates that online retail sales will grow at an even faster pace in the Asian/Pacific region. Meanwhile, ZenithOptimedia, a strategic communications firm, estimates that businesses will spend more than $70 billion this year on advertising on the Internet, and that the growing interest in online video and social media applications will lead to further increases in advertising over the Internet during the years ahead.
In regard to LivePerson’s financial condition, the company is very strong, with its cash alone equal to almost three times the company’s total financial obligations as of June 30 of this year. With a financial liquidity (current ratio) of 4.4 as of June 30, 2011, and the company’s total liabilities representing only 21 percent of its total tangible assets, the company is in a very favorable position to acquire other companies that might offer synergistic products and services.
The factors and developments discussed above suggest that now would be a good time to establish a position in this perennial growth stock.
About the Author: David Frazier
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