LivePerson, Inc. (LPSN) Q1 2013 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the LivePerson First Quarter 2013 Earnings Call. My name is Amber, and I will be facilitating the audio portion of today's interactive broadcast. [Operator Instructions] At this time, I would like to turn the call over to Mr. Dan Murphy, CFO of LivePerson; and Chairman, CEO, Robert LoCascio.

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

Thanks, Dan, and thanks, everyone, for joining us today. During the first quarter, we continue to advance our platform strategy with a roll out of LiveEngage to a great number of customers. We also start continued traction, key business in case such as bookings growth, numbers of deals signed and new customer additions. During the quarter, our B2B revenue were $38.9 million, 18% higher than last year's $32.9 million. Bookings came in at $7.5 million, a 22% increase over last year's first quarter. We signed more than 50% new logos during the quarter when compared to last year between new and existing customers, signed 26% more deals overall. We also continue to see solid uptakes surrounding new product adoption. Although we had an unusual spike in attrition stemming from a few enterprise customers in the first quarter, our overall growth rate for Q1 in B2B, excluding SMB, was 23% year-over-year. Two years ago, we laid out a strategy to set LivePerson on the path to become the leader in real-time customer engagement. And today, I remain confident in that strategy and in how the platform we've seen developed and deployed. However, right now, the single most important thing we can do is to make the necessary investments to accelerate the rollout and adoption of LiveEngage. In making the additional investments this year, our goal is build a more scalable company and platform that can ultimately get us to the $500-million-plus revenue level and deliver even stronger margins and growth rates in the future. Today, we're focused on making the necessary changes to allow us to grow beyond what we've seen in the past and to achieve what we believe the business is possible of doing in the future. Dan will do a deeper dive regarding the drivers for an impact of these investments for the year. During the first quarter, we made solid progress against our strategy, rolling up the platform to more than 4,000 small business customers. With LiveEngage, it's no longer going to be about the individual engagement channels, but how to create cohesive strategy using the best combination of tools to drive the most value for our customers. LiveEngage leverages the strength of our core intelligent capabilities, providing functionalities such as seamless campaign creation and real-time segmentation capabilities. We're also making our support of the platform more frictionless and proactive by using our own communication framework of chat, video, voice and content. The beauty of our core product line is that we've already received some large -- we have some of largest companies in the world. And the enterprise customer is becoming a different type of customer for us going forward. They're expecting us more than ever to deliver an engagement platform than just a single channel of chat. So we're creating use cases so they can derive more value from the platform where the goal is call deflection, new customer acquisition or increasing online sales. The conversation with our customers is around how we're going to help them create a strategic roadmap that build a more complete customer engagement strategy. During the first quarter, we more than doubled the number of customers who are going live with mobile chat when compared to the fourth quarter. We now have more than 200 customers using our mobile solutions, spanning across the customer base in various sectors. Social mobile has made the Internet more personal. Now more than ever, customers are expecting a more humanized experience on mobile. Today's technology is allowing companies to do just that, make it personal. The ROI on a good mobile experience is very high and many companies are not doing a great job with mobile just yet, so when a customer has a great experience, they share it, especially in the social space. With shorter chat times and equal to higher customer satisfaction ratings, mobile has become a strategic requirement for more companies, and they're using and driving and adopting our mobile applications. About a month ago, we launched predictive targeting 2.0 with several beta customers, with the addition of the Amadesa technology that we acquired last year and what we've got is a machine-learning capabilities that will cut down implementation times and allow us to deploy at a faster rate. An early success story comes from an enterprise customer who's previously using our old predictive technology that we built, and after they deployed predictive technology 2.0 from Amadesa, they realized a 25% incremental chat conversion with 30% incremental revenue lift. They previously had, with 1.0, the way they were scoring and engaging our customers was by building manual rules, and with PT.2.0, they're able to do this automatically because the engine has its own machine-learning technology. So it's allowing us, once again, to get to the place where we want to, around implementation times, and that's going very well as we deploy that to about 15 customers now. Global expansion is also becoming a larger part of our focus. And a few weeks ago, we made our first serious move into Japan, announcing a partnership with Vixia. Vixia is a leading interactive digital marketing company in Tokyo, and a subsidiary of one of Japan's largest contact centers. We're looking forward to delivering our intelligent digital engagement solutions more broadly across the Japanese market now. Now as you know, we completed the acquisition of our Australian reseller partner ENGAGE, which gives us a greater exposure to the fast-growing APAC market, and we're going to strengthen our foothold in that over this year and next. In EMEA, despite tough economic times, recently we went live in the Netherlands with one of the world's largest mobile communications companies. They're using our mobile chat solutions in 3 languages, Dutch, French and English, and using it on Italian mobile website as well. We're also getting ready to kick off the first of our 3 Aspire customer summits this year. Aspire is where leading brands share best practices and success stories around how they're pushing the boundaries of digital, creating innovative unique end-to-end customer journeys, utilizing live person intelligent engagement solutions. And the first of these events will be held in Australia at the end of this month. Last year, we had several of the largest companies in the regions in attendance, and with the expanded base of customers gained from the ENGAGE acquisition, we're hoping to increase attendance by about 50%. During the first week of June, we'll be hosting our London Aspire event. And our largest event this year will be held in New York in October. We've been busy transforming the business to a true multichannel engagement platform. And 2013 is an important year for us as we prepare to deliver on the next big piece of the strategy. That's the rollout of the platform. We've made great progress in a short period of time, preparing the business for scale by building out our infrastructure, putting the right team in place and delivering 4 new products, which are now merging into a single cohesive platform. Now we're focused on accelerating the strategic plan by making further investments engagements in our global infrastructure, R&D, product groups and stepping up our marketing initiatives so we can continue to build momentum behind the rollout of the LiveEngage platform. So with that, I'd like to now turn the call over to Dan, who will review the numbers in greater detail. Dan?

Thanks, Rob. Our focus during the first quarter was similar to that of the fourth quarter, delivering our LiveEngage platform and rolling it out to a greater number of customers while continuing to make investments in infrastructure, people and processes. Last year, we added headcount, made several technology acquisitions and completed the ENGAGE acquisition in Australia. This year, we'll continue to invest in the business to support our long-term growth initiatives. While it would take some time to fully realize the benefit of all the investments, we remain confident in our overall strategy, and we've made some good progress so far and we'll continue to make progress throughout the year. During the first quarter, B2B revenue was $38.9 million, an 18% increase as compared to the prior year quarter. Now overall growth rates for Q1 in B2B, excluding small business, was 23% year-over-year. Total revenue came in at the midpoint of our guidance range, increasing 16% as compared to the prior year, to $42.5 million. Revenue from the consumer operations for the first quarter of 2013 was $3.6 million, which is down 3% from $3.8 million in Q1 of 2012. During the quarter, we had approximately $900,000 of foreign currency loss that impacted our financial metrics. While our results are often slightly impacted by foreign currency fluctuation, the impact this quarter was unusually high as compared to past periods. The loss is primarily generated through the exchange rate between the U.S. dollar and the U.K. pound. All metrics that I discuss in this call, including adjusted EBITDA, reflect the impact of the foreign currency fluctuation. First quarter adjusted net income per share came in at $0.06 as compared to $0.09 in 2012. GAAP EPS came in at 0 for the first quarter of 2013 as compared to $0.06 in 2012, and adjusted EBITDA per share was $0.09 as compared to $0.16 per share in the first quarter of 2012. All 3 measures were impacted by the negative foreign currency fluctuation, primarily from the U.K. pound. Bookings were $7.5 million in the first quarter, which is 22% higher than the first quarter. We had a couple of large deals that are expected to close in the quarter that were pushed out, and we experienced some weakness in the European market. As a reminder, LivePerson defines booking as new contractual commitment from new or existing mid-market or enterprise customers that excludes nonrecurring revenue. This metric generally represents contracts with committed or current subscription fees and does not capture usage or performance-based contracts. In Q1 2013, we signed 149 total deals in the quarter compared to 117 deals in the first quarter of 2012. During the quarter, we added 43 new enterprise and mid-market customers versus 28 in the first quarter of 2012. Our small business group's revenue grew by 3% in the first quarter when compared to the first quarter of 2012. Average deal size for all deals was 51,000. The average deal size for new customers was 51,000. The average for existing customers signing up for an upsell or expanded business was 50,000. Similar to our booking metric, this metric generally represents contracts with committed or current subscription fees and did not capture usage or performance based contracts. The breakdown of enterprise and mid-market bookings and revenue turns is approximately 70% existing customers -- existing customer expansions and approximately 30% to brand-new customers. As Rob mentioned earlier, we had an unexpected increase in attrition in the quarter. Customer attrition for enterprise and mid-market accounts averaged 2.9% during the first quarter, which compares to the 0.9% in the fourth quarter. Q1 is typically a higher attrition quarter, as customers are resetting their budgets for the year. In addition, the increase in attrition is predominantly driven by one large customer cancellation and some softening in the European market. While the attrition had minimal impact on Q1, it will have an impact in Q2 through Q4. We do not currently anticipate that the higher than expected attrition in Q1 is a trend, but we're monitoring closely. Small business attrition rates average 2.6%, which is consistent with prior quarters. Pay-for-performance generated approximately 16% of total enterprise revenue and 9% of total revenue, consistent with fourth quarter and prior year first quarter. Revenue coming from outside the U.S. is approximately 29% of total revenue, with the U.K. representing our largest concentration outside of the U.S. The increase in international revenue is primarily driven by our presence in Asia-Pacific through the recent ENGAGE acquisition. The revenue breakdown by industry verticals was consistent with prior quarters. Telecommunications made up 32%; financial services, 25%; retail, approximately 13%; technology, 13%; and other at 17% for the quarter. In terms of the scope of our customers, at the end of the first quarter of 2013, we had 36 customers above $500,000 in annualized spend, and we have 13 customers spending more than $2 million in annualized spend. We believe this continued opportunity with our larger accounts to grow organically and build more strategic relationships, especially as we roll out the LiveEngage platform. First quarter gross margins came in as anticipated at 76%, which compares to 78% in the first quarter of 2012 and 76% in the first -- fourth quarter of 2012. In Q1, we had full quarter of amortization for both the Look.io acquisition and ENGAGE acquisitions. And in Q2, we expect the beginning amortization of the Amadesa acquisition as we continue to roll out PT.2.0 technology for our customers. We ended the quarter with a cash balance of approximately $95 million, which compares to $103 million at the end of 2012. We had $1.7 million in capital expenditure for the quarter related to service, computers and the build out of office space. In addition, we purchased approximately $7.4 million of common stock in our corporate buyback program. First quarter accounts receivable were $24.6 million. Our DSO metric for the first quarter of 2013 was 50 days, which is in line with the fourth quarter. As discussed in prior calls, we are comfortable with the DSO in the range of 50 to 55 days. Our tax rate during the first quarter was 59%. The increase in the effective tax rate is primarily attributable to an increase in nondeductible expenses related to incentive stock options as a proportion of taxable income. Now I would like to discuss the financial expectations for the second quarter of 2013 and the full year, taking into account some of the facts we discussed on this call. As Rob mentioned, during the second quarter, we'll be hosting 2 of our 3 global customer summits, so we expect to see increase in expenses as we ramp up marketing efforts surrounding those events. And also as we fast-track some of our product initiatives to support the platform rollout, and we will have a full quarter impact in Q1 attrition. With that, our current expectations for Q2 2013 are as follows: revenue of $42.5 million to $43.5 million; adjusted EBITDA of $0.05 to $0.07 per share; adjusted net income of $0.03 to $0.05 per share; and GAAP EPS loss of $0.02 to $0.04; and a fully diluted share count of approximately 58 million. As Rob and I both mentioned, during 2013, we're moving ahead with the launch of our LiveEngage platform, which has been rolled out to approximately 4,000 customers and we remain confident in the strategy and the potential of the new platform. 2013 continues to be an important year from the execution perspective for LivePerson, as we're seeing an inflection point in this business model. We spent the past few years transitioning the company from a single product to a multiproduct company and now to a platform. And we plan to make further investments in 2013 we believe are needed to accelerate through this transition and execute on the next big piece of the strategy. We're adjusting full year guidance based on the full year impact of Q1 attrition and the softening European market and increased investment necessary for the additional resources behind sales marketing and R&D to support the rollout of the LiveEngage platform. In addition, we do not expect to recoup the foreign currency loss previously mentioned. With that, our current expectations for the full year 2013 are revenue of $174 million to $179 million; adjusted EBITDA of $0.32 to $0.35 per share; adjusted net income of $0.18 to $0.21 per share; and a GAAP EPS loss of $0.02 to $0.05 a share. Fully diluted share count of approximately 60 million. However, full year 2013 assumptions include: amortization of intangibles of approximately $4 million; stock compensation expense of approximately $13 million; depreciation of approximately $10 million; and effective tax rate of approximately 40%; a cash tax rate of approximately 40%; and capital expenditures of approximately $12 million. We expect gross margin on a GAAP basis to be approximately 75% due to the amortization of the Look.io, Amadesa and ENGAGE acquisitions running through the cost of goods sold. And as a reminder, our cost of goods sold continues to be sensitive to foreign currency fluctuation. Furthermore, as a percent of revenue for the year, we continue to anticipate sales and marketing to be approximately 35% of G&A, G&A approximately 18% and R&D to be approximately 19%. That covers all the operational highlights. And now, if the operator could rejoin the call, we'd be happy to take questions from folks participating in the call. Operator?

[Operator Instructions] And your first question is from Michael Nemeroff. Michael B. Nemeroff - Crédit Suisse AG, Research Division: I just wanted to dig in a little bit on the customer attrition, the big customer that you lost, just how much in annual revenue did that customer contribute? And then also, Dan, I don't think I heard any of the product stats or how many new products -- how many different deals in the new products, and we'll start from there.

Okay. So from the customer perspective, there's a large customer -- we don't normally talk about specific customers and their spend, but it was a large customer that had an impact on our attrition rate. And so, if they cancel in the first quarter, we had a minimal impact in the first quarter, but that customer won't be there in Q2, Q3 and Q4, hence, the adjustment of the guidance. As far as the product metrics -- as far as new product metrics are concerned, as we roll out the platform, our customers will have access to all of our offerings and all of our products. And as we move through 2013, it's a metric that doesn't have as much of an impact on the business as it previously had. Michael B. Nemeroff - Crédit Suisse AG, Research Division: Okay. And was this a competitive loss? Did this customer go to some kind of a competitive solution? And then also, when you talked about the reduction in guidance for the year, you mentioned that the macroeconomic environment in Europe, is this -- is that customer part of the macroeconomic or is it a competitive loss, I guess, is the question?

No. It was more of a -- it was a PFP customer, so the total attrition is a little over $5 million, the impact through the year between this one customer and a couple of small ones. So it's not a trend, but we got caught a little offguard on the PFP. It's not our largest PFP, it's a bigger-sized one. And so that has the impact, which we can't get back. So, and it wasn't a competitive loss. Just, they want to do with themselves and so that changes how we're going to work with our customer and a couple other ones. When it comes to know talking about how bookings number and a percentage of new products, because everything is going on to the platform, what we want to do now is start focusing on how many customers we have on the platform. Because now, everyone is getting all the products, they get access to all the products, so we're not selling individual products like LP Marketer, Insights and all those. Just now, everything is on the platform and then we're building out on the platform. That's the change for this year. We have 4,000 customers now that are rolled out on the platform. We had 1,000 last quarter. So we're making good progress. And now our focus is getting them to use more than one piece of the product. Right now, they're all using chat on the platform. But now we're focused on getting them to use more than one product. Michael B. Nemeroff - Crédit Suisse AG, Research Division: That's very helpful. And if I could just ask one last one. You'd mentioned a couple slipped deals in the first quarter from last quarter, I was just wondering of the progress and have you signed all of those, have they gone away? And then also if you could just comment on the implementation issues, the lengthening. That's also been an issue too.

So we're still in pursuit of those deals. We're still actively going after them, and we're still in active discussions. As far as the implementation cycles, everything from an implementation perspective as we're rolling out LiveEngage, the goal has been to make it less frictionless -- or more frictionless, sorry, in rolling out the products, but some of our larger customers aren't on the LiveEngage platform yet, and we're still in that 3- to 4-month time frame.

And the next question comes from Nathan Schneiderman.

Just to clarify on this large customer attrition, it was in the P-for-P space. And would you who have needed to take the revenue guidance down had this customer not churned off that solution?

So in the PFP, it's a fixed portion of PFP, so that's -- to answer that part of your question. And no, we would not have expected to take the guidance down.

And then when you look at the balance of your customer base, what kind of customer concentration do you feel you have remaining in the P-for-P segment if you had the loss of, let's say, your next biggest customer, would that be an impact you could absorb or not? And maybe if you could answer that same question on the base business as well.

Yes. We're not seeing anything with other customers. We have customers we give the concentration $2 million bucket $5 million and a couple, 1 or 2 about $10 million. But we don't see anything right now. It's an unusual case. Usually we get some notice that it was part of the negotiation, and then they just -- we can't get from there where we need to go. So it's what it is, but it wasn't planned, and we're keeping a focus on all the other enterprise customers, and we have very low attrition rate over the last 5 years. So things haven't changed. But we got hit with this one surprise, and we got to suck it up and it's going to impact the year. But it's not like a trend, so, like we have a bunch of customers leaving it just was -- it was a one specific case and a couple small things.

Okay. Can you comment about the -- maybe I heard different numbers online versus the press release, but from the press release, it sounded like you had 80 existing customer deals versus 89 in the year ago period. But I may have heard a different number on the live call. So how many existing customer deals did you have and did you comp negative there? And if so, why, why do you think?

No. We have to make an adjustment on the press release. The press release, we found 149 total deals in the quarter for Q1 2013 compared to 117 deals in the first quarter of 2012. And during the quarter, we added 43 new enterprise and mid-market customers versus 28 in the first quarter.

Oh, okay. So you're actually -- you actually comped positive on that stat. Okay, great. Final question for you. Just on the softening environment that you saw in Europe. I was hoping you could describe what you actually saw in a little more detail and how did it manifest itself? And then thus far in Q2, have you noticed any change there or do you -- conditions seeming to continue that pattern?

So as far as how it manifested itself, we had some deals that we thought we had an opportunity on and some of the deals slipped through and customers are pulling back just from a financial perspective on some of the deals that we were pursuing. So as far as Q2 is concerned, we're obviously still focused on closing deals in Europe, and we expect the softness to continue for a period of time, but we're still actively pursuing deals and signing deals and moving into other territories.

And the next question comes from Richard Fetyko.

Curious on the LiveEngage rollouts, what's the timing this year? Obviously you've been in the market with the SMB or the small businesses, but the enterprise and mid-markets, when do you expect that to begin and finish and should we expect any hiccups with the larger customers that perhaps you built into your guidance as well?

So we're really focused right now on just small business area and we're not -- we're touching selectively some mid-market and no enterprise right now. So the focus is really on the small business. We don't want to disrupt anything that's happening in the enterprise side when it comes to selling and the deals that we have. So that's really towards the latter end of the year, early next year. And right now, we're focused on small business. And then we're testing different ways to move customers into using more of the products. So, so far, they're excited. It's making them more competitive. We're changing the market on how SMBs are buying from us because they would come to us from chat. They will look at other chat competitors. But now they have a broader offering. So the SMB feels strong about what we are giving them. And we want them to work it out because with a small enough business where they can work out the kinks, work out on the implementation. But so far, we like what we're seeing, and we want to accelerate that and keep investing in the business and not pull back. Obviously, the thing with attrition is we looked at it and said, okay, should we pull back on the expenses to equal out on the bottom line because we want to make our number. We feel we like we have this opportunity. We need to get the platform out and keep growing, so we're up to 4,000 customers now and we're making good progress.

With respect to the investment that you're making into the product and to accelerate some of these things, I mean, where are those investments and what form? Is it more developers, more sales force, individuals and more people in the services group -- Professional Services group, just -- can you give us a little more color on what methods are being made?

Yes. We're starting on the marketing side like we're building up on the lead flow right now. We just launched a whole 3 weeks ago a whole new lead flow campaign. They're ready to sort of move it up and increase the lead flow beyond even the chat leads we get. So the marketing is getting a big portion of the spend because there's more sales activity there and there is some more development activity that we want to put around there, but it kind of starts with marketing. And really, 3 weeks ago, we launched new micro sites. We started buying new Keywords, and we want to keep going with that because we're seeing some good progress with that team.

Okay. So lastly, could you give us an update on the sales force expansion how many people you have?

Sorry, Richard, can you ask the question again? It's tough to hear you.

Sorry, the sales force expansion, how many people you have in your sales force now?

So we ended the quarter at 48 people, 48 account execs.

And your next question comes from Mark Schappel.

I wonder, Dan, if you could just address the R&D spend that was down sequentially. And caught me by surprise, I would have thought that would have been up actually, given the product investment that you're going through right now.

So there's a slight downtick sequentially. We have some costs in Q4 that were outsource costs that happened in Q4 that didn't occur in Q1, but that investment will start to pick back up in Q2.

Okay, great. And with respect to the ENGAGE acquisition a few months back, what was the contribution to the quarter?

We don't even disclose the financials specifically around ENGAGE. But we're happy with the direction that it's going and it's giving us, as Rob talked about, a broader footprint in Asia-Pacific and helped us with the Vixia deal as well. So we're excited about the acquisition, and it's going in the right direction for us.

Okay. And then finally, Robert, I was wondering if could just address or give us an update on the Apple rollout. I don't believe we heard anything about that in the prepared remarks.

Yes. I mean, we're sort of steady-state there right now. So no change right now.

And your next question is from Brian Schwartz. Brian J. Schwartz - Oppenheimer & Co. Inc., Research Division: Rob, I was wondering if you could comment on the sales productivity trends, kind of what you're seeing and what your expectations are for potential gains ahead?

So the mid-market right now is our strongest group. They're actually sort of beating the internal expectations we have of them. The small business group, because they're really focused on the rollout of LiveEngage, is sort of steady state. We haven't seen tremendous growth because they're very focused on just moving the platform out. I think enterprise, there's a lot of opportunity there, and this is where we're continuing to make changes. We're focusing on marketing messages. But they're just -- they're getting started. It's -- they're talking about the platform. They're talking about the multi-products. So, but what we're trying to do now is take some of our large enterprise customers and actually really accelerate what we do we do with them beyond what we're doing on just chat, and that's kind of the exciting opportunity. But we're not there yet, and we're still going through a learning process with that group. The group that's also interesting is indirect channels. That group was as planned, and we have never really had a challenge group. We fired it up mid last year. There's like 5 or 6 people in that group today. The leader came with our Head of Sales from Oracle, and he is doing a good job in opening up channels with, obviously, call center partners also digital agencies. So now we're expanding in the digital agency area. We've got a project we're doing right now with one of the largest digital agencies in one of our customers in using the product with Keywords. So there's some good action happening in there. So mid-market, great. Channel is really good. Small business, rolling out of LiveEngage and flat. And enterprise is still going through retooling of how we're going to really expand our strategic accounts and grow them on a different level. But they have good growth rates. They're, obviously, the core is doing strong outside the attrition. We had 23% growth year-over-year on that one. Brian J. Schwartz - Oppenheimer & Co. Inc., Research Division: Great. And, Dan, just wanted to make clear on the guidance change. I think you did answer it before, I'm sorry, the message you got, got chopped up. But it looks like from the revenue, the midpoint of the guidance is down about $7 million. I think you said $5 million-plus was related to churn and attrition. Looks like you had almost another $1 million that hit you just on currency here. So it looks like I still maybe have about $1 million delta. Is that reflecting softer activity in Europe or is it more just a range and that's how we should think about it?

It reflects some of the softness in Europe and it's a range. So I think you have the components right that you went through. Brian J. Schwartz - Oppenheimer & Co. Inc., Research Division: Great. And then just last question for you guys. I didn't have a chance to see the proxy, but saw that you guys had filed that here recently. Can you maybe just refresh us for this year in terms of what are the key compensation performance metrics for you guys, whether it's a bookings growth, revenue growth or EBITDA? What are the compensation focuses for the plan this year?

So obviously, bookings, revenue, LiveEngage rollout, global expansion. So when you look at our -- and EBITDA, obviously, is with EBITDA, but we fund bonus off the EBITDA number. So that's how we basically get our bonuses today. So those are the drivers of the business and for our bonus plans.

And your last question comes from Jon Hickman. Jon R. Hickman - Ladenburg Thalmann & Co. Inc., Research Division: Can you -- you say you have 4,000 customers on the LiveEngage platform now. Can you kind of give me what you expect as you go forward? Is that going to go to 6 or is -- isn't your total count around 8,000?

Yes. So the goal is to get all 8,500 customers up and running on LiveEngage. So the goal now is to have by Q2 4,000. And so we're obviously moving in that direction. We'll continue to keep moving as we roll out the product. We also have a new version coming out of the product in Q3, Q4. And so, that 2.0 version is also, I think, will have a tremendous amount of capabilities in it to start moving the larger small business and then mid markets, and then ultimately, the enterprise customers up. We're also building in all the predictive technologies. The PT technologies are being built into the platform. So that's all being wired in as we speak because that'll help us with the implementation. So the goal ultimately here is -- what I've been looking at, and if you look at our company, as SaaS companies have been growing, when you look at any of us in the category, you see sometimes margin compression and sales cycles go out, and the proxy can become very complex and we've taken the time, I think, to not head in that direction and the platform will get us to a place where we can scale. And that's where we want to go with the business, so we're making good traction on focusing on the platform and that's where we are today. Jon R. Hickman - Ladenburg Thalmann & Co. Inc., Research Division: So do you have a number of how many of your small business customers are using more than just one product on the platform?

Yes. There's about 800 or so that are using more than one portion. They're using the content portion or one of the other areas, video, voice, mobile. So, so far, so good. We got them on and just wired them up and what's interesting is the use cases. It's coming up with a set of use cases and the small business keeps signing new use cases. Like I remember, I was talking with one small business guys and one of our customers, who uses email to do outbound email around trade show promotion, we got them then now to use the content capabilities to promote trade shows when somebody comes to the website, so it's a much more effective way. So we're starting to build the case studies and use cases for our customers. So it's an exciting time. Last year was all about do these products work, do people want them? And now it's all about having a scale and get these in the hands of our entire customer base plus the future customers, so... Jon R. Hickman - Ladenburg Thalmann & Co. Inc., Research Division: So just one more question there. So once you're on the platform, if you want to add a module or a capability you just -- I mean, you can just turn it on and then you start billing that person for that extra...

No. actually, we're not doing it that way. Everyone gets all access to all products and we're charging them as they use the products. So we're not limiting them by feature and functionality. One of the things I think we talked about last year was nickel-and-diming your customers on each little feature and functionality in API, it's not a good way to ramp a business. So we said, here's the platform, here's the base fee, use it. And as you use it, you're paying us. And that's what we've been testing in the market, and that's what we've been seeing. So it's a much more -- it'll be one product set for all customers. It's one way to pay for all customers, and it allows us to have a lot more freedom on driving adoption and ramp the overall business, and that's what we're looking to do. So as I said, we want to move above the 20% growth rates, and that's what we do consistently in the B2B space. We really want to drive it to another way and that's what we're doing with the platform. So, so far, 4,000 customers, we're hitting our goals there.

And we did have one other question from Mike Latimore.

The guidance kind of implies some positive seasonality in the third and fourth quarter, I believe. I guess, can you talk a little bit about that pattern occurring at the same time that you're starting to move some of the larger companies onto LiveEngage? I mean, do you think that seasonal pattern plays out kind of as you go through that transition?

Yes, I think it relates to what Bob talked a little bit about earlier on the sales force productivity. We're doing well in mid-market. We've made the investment in channels. So the expectation is, as you move towards the back half of the year, there is the seasonality upside that we normally have. We have the impact of attrition, but we have to sell more and do more in the back half of the year, which we're focused on. And that's how we're looking at the guidance.

And in terms of just the mid-market and enterprise category there, I mean, what's the -- what percent of those customers, let's say, would be reasonable to have on LiveEngage by year-end?

A small percentage of those customers. Depending on when we get the next version out, we'll see what the adoption -- we're just being careful there. The first part is small business. As small business is successful, work through pricing, work through how upselling and getting more usage. And so far, that's what we're working on and we're getting the learnings. Once we get that, we can accelerate the adoption in the other areas. But we just want to focus on that area. And we've got some cool technology. We even built into the platform, we built our own connection framework, and we're monitoring the use of our product. And we literally have a success manager who can proactively engage a customer as they're using LiveEngage, and say, look, it seems like you're only using chat, why don't you try content and then we have a way to even walk them through a setup instantly. So we're using our own technology embedded in our product to drive adoption. Our whole customer support team now is supporting that. So even the way we're aligned internally is all against adoption of the platform. So -- but we want to go through the learnings, and we're doing it and we're doing it as quick as we can.

Is it a fact that the second quarter attrition would kind of normalize again back to what we've seen in other second quarters?

Yes, the assumption is that attrition would normalize in Q2, Q3 and Q4.

There are no other questions at this time.

Thank you for being on the call, and we'll see you next quarter.

Thanks, everybody.

This does conclude today's conference call. You may now disconnect.