LivePerson, Inc. (LPSN) Q3 2013 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the LivePerson Third Quarter 2013 Earnings Conference Call. My name is Jennifer 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 our presenters, Robert LoCascio, CEO; and Dan Murphy, CFO. You may begin.

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 that 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 concerning the company's financial performance. We report GAAP results as well as provide a reconciliation of these non-GAAP measures to GAAP financial measures in our earnings release. You can obtain a copy of our 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 third quarter, we continued to execute on our overall strategic plan, empowering our sales team in getting the LiveEngage message out to the market. We saw a strong trajectory in bookings growth and number of deals signed, while exceeding both our revenue and income projections for the quarter. Third quarter revenues were $41.4 million, 15% higher than last year's $36.1 million. We posted our largest bookings quarter ever during Q3 at $10.2 million, which is a 44% increase over Q2 of last year and a 26% increase over last year's third quarter. We continue to grow the depth and quality of relations with our existing base, signing several major expansions during the quarter. About 30% of overall bookings came from new customer additions and we added a record 55 new logos to our customer base. With the rollout of our LiveEngage platform, a growing number of our customers are leveraging the broader capabilities of our solutions and driving greater business value to our multichannel engagement strategy. A great example during the quarter was our expanded relationship with O2, which is one of the UK's largest telcos. O2 is redefining its customer service offering, shifting more to a digital engagement strategy to better meet the demands of its 23 million customers. They're leveraging the broad set of features on the LiveEngage platform, including live chat, targeted content, rich media and mobile engagement, to connect with an increasing number of visitors in the digital space. They're currently hosting about 700,000 interactions per month on our platform, and that's about an interaction every 4 seconds, 24 hours a day, 7 days a week. What's even more encouraging is the penetration we're seeing into both net new accounts in new verticals with the LiveEngage value proposition. During the quarter, we closed the deal with News UK, which is a part of News Corp. The initial launch was on their Times digital property, which is a compelling event for News UK, as they want to be the first in their industry to offer web and mobile chat to sell online subscriptions. The scope of the relation quickly increased with the launch of their new Sun+ digital entertainment platform. Deployment of our solutions in the media space is compelling for us as well, as we explore and present diverse use cases of our platform to clients and prospects across different new verticals. Regionally, we started creating a series of regional events around the country called Aspire to Lead. In one of these events in New York City a few weeks ago, and this event was aimed at senior level executives that are responsible for driving change within their organization, transforming customer engagement in sales, marketing and customer service. The event included executives from key accounts and prospects looking to connect with their peers and share best practices in digital engagement. We had some exciting presentations of best practices from Snapfish, Intuit, Disney, Sky and Bankwest of Australia, a strong group of thought leaders among our customer base. Snapfish is a customer who presented how they're using data that we capture off the platform to drive voice of the customer and value into the overall business. With more than 90 million online customers in 12 countries, it's essential they understand how to engage them meaningfully in a digital channel. Their millions of customers produce an enormous amount of valuable data, and Snapfish deployed LP Insights to aggregate and analyze all this data and better understand the pain points in their customers' journey. The results have been impressive. LP Insights has enabled the company to improve sales per chat hour by 48%, average order values up by 10%, and the agent productivity by 14%. We also continue to gather valuable feedback in early use cases from our small businesses as well, who are starting to use the platform in many different ways beyond chat. We've seen content-based engagement double with new SMB clients that are on-boarding with LiveEngage now. In addition, we're driving more user-friendly marketing to our SMB customers with webinars, with a series called 60 Seconds to Success, which educate customers on practical use cases such as shopping cart abandonment. We're using these online webinars, really, as a way to also drive reduction implementation cycles, and obviously, more usage of the overall platform. Another customer, Sunweb, it's an online travel company in Europe, has been driving great success after using our -- the content portion of the LiveEngage platform. So they're using the targeting capabilities around content. Like most e-commerce websites, they sort of reached their peak in buying advertising at a rate that would be cost effective. So now we've helped them really design a way to create targeted campaigns to address the needs of increasing conversion rates on the site. We targeted about 65% of their traffic with these personalized targeted offers. And in less than 2 months, their online sales grew by 14%, conversion rates with engaged visitors grew 34%, which resulted in an overall conversion rate increase of 22%. In our Pay for Performance business, 2 of our legacy Pay for Performance customers had their biggest sales months by chat, with one more than tripling their run rate versus Q3 last year. Using the flexibility of the PFP model, we were able to really scale labor at a greater rate, then scale, obviously, the peaks of these businesses and how they launch and grow their online traffic. The 2 proof of concepts that we mentioned the last quarter converted into full contracts and one actually was our first PFP mid-market customer. We're also gaining traction with our PFP offering into new verticals around retail, and actually, lead generation, which is something new for us. As a result, PFP is up 8% quarter-over-quarter with these customers in some of the new things we're doing. Accelerating demand for digital engagement is something we're seeing on a global scale and as we continue to expand our presence outside the U.S. market. In Australia, we added 8 new enterprise deals in Q3, which was our best net new customer quarter yet. We're now working with 5 of the largest big banks in that region. And as online banking grows, there's a big opportunity to really build out greater digital adoption programs with these customers. And as big brand retailers are starting to place greater focus on bridging the gap between their in-store and online experience, retail is also becoming an emerging vertical in Australia. In Japan, we're accelerating our growth in that region, in that country. We continue to build out our infrastructure and headcount to support our expansion plan. We launched our first B2C customer during the quarter, JetStar Airlines, and signed our first banking client. During the first week of December, we'll also be hosting an event in Tokyo with some partners and about 100 potential customers, and so that'll be a big kickoff of our partnership in Japan. Recently, we hosted here in New York, Partner Day. We had about 50 partners attend, from North America, Latin America, Japan, and other regions around the world, focused around our BPO firms, our business process outsourcing companies like the call centers, digital agencies, ISVs and other resellers. And as we continue to scale our business, it is increasingly important for us to build strong relationships with these partners. During the quarter, we doubled our channel bookings, adding 27 net new logos. We got 120 year-to-date. We also started to see Brazil open up, for signing 8 new deals in the region with a partner down there. As we mentioned, we've started to invest in the channel operations at the beginning of the year, and we think it's important, if we're really going to accelerate and take the revenues to another place, to go beyond direct sales, and that's part of the strategic plan that we placed to the investors about 1.5 years ago. We also continue to look at new buyers within organizations. As Gartner estimates in 2017, the CMO will have a lot more power over budgets than even the CIOs. So we're really looking at targeting marketers with the platform and working with our relationships with digital marketing space and digital agencies like Razorfish. It's really important for us. Last quarter, we announced a partnership with Razorfish, and we're out there joint selling with them, we're doing joint marketing activities. So I think this partnership is important to us. It's also something that we're expanding internationally. So we feel that they are really helping us really penetrate more into the marketing side of the organization, which is a new buyer for our company. Of businesses, overall, struggling to create a cohesive customer engagement strategy that optimizes the digital experience, they are increasingly looking for us to help them now, with our LiveEngage platform and the knowledge we have of doing this. Our platform's vision and it's the best-of-breed products out there, and it sits, really, side-by-side with some of the technologies they already have in their call centers today. So really, over the past 2 years, we've made important changes to obviously our people here, the products we're delivering and how we're delivering them, in order to scale this company to a different level. And I'm really pleased about this quarter and the inroads we've made with our existing base, with new customers, and really moving towards delivering on the overall vision of being a digital engagement company and building a platform for that. So with that, before I turn the call over to Dan, I'd also like to mention that this year, we'll mark our 12th hosting of the FeedingNYC event here in New York City. It's a day where LivePerson employees and volunteers and some of you who are on this phone, come out and help us pack Thanksgiving meals, and actually go out and deliver those meals to thousands of families around New York City. We've delivered about 25,000 meals, and that means we've touched 25,000 families and countless others since we started this after 9/11. If you're in the area, I would really encourage you to come down to Chelsea Piers on the 26th of November and really help us get out there and do this. It starts at about 6:00 a.m. in the morning and we go until about 6:00 p.m. at night. To figure out -- to find out some more information, go to feedingnyc.org and you can see how you can help us. So with that, I'd like to turn the call over to Dan, who will give a deeper dive into the numbers. Dan?

Thanks, Rob. 2013 continues to be an important year from an execution perspective for LivePerson. During the third quarter, we remained focused on putting the building blocks in place that should support our long-term growth potential. We continue to grow and expand relationships with existing customers, as well as expand our market reach internationally and through channel partners. In addition, we continue to build momentum behind the LiveEngage rollout. We completed our empower sales enablement program that trained and readied our global sales team on the LiveEngage value proposition, and we received valuable feedback from our customer advisory board and partner base, following the series of many Aspire events we hosted in New York City. We are pleased with the quarter's revenue. Adjusted EPS and adjusted EBITDA exceeded expectations for the quarter, while GAAP EPS came in at a high -- at the high end of our guidance range. In the quarter, total revenue came in at $45.2 million, increasing 14% as compared to prior year's $39.7 million. B2B revenue, including small business, was $41.4 million, a 15% increase compared to the prior year quarter. Revenue from the consumer operations for the third quarter of 2013 was $3.8 million, which is up 7% from the prior year quarter. For the first 3 quarters of 2013, B2B revenue, excluding the small business segment, has grown 19% over the same period in 2012. Third quarter adjusted net income per share was $0.07, as compared to $0.08 in the prior period. GAAP loss per share was $0.01 in the third quarter of 2013, compared to income of $0.03 per share in 2012. And adjusted EBITDA per share was $0.09, as compared to $0.13 per share in the third quarter of 2012. In the third quarter of 2013, the impact from foreign currency fluctuation was immaterial. Bookings were $10.2 million in the third quarter, which is a new record, and was ahead of last year's third quarter, which came in at $8.1 million. As a reminder, LivePerson defines bookings as new contractual commitments from new or existing mid-market or enterprise customers that excludes nonrecurring revenue. This metric generally represents contracts with committed recurring subscription fees and does not capture usage or performance-based contracts. The breakdown of enterprise and mid-market bookings was approximately 71% existing customer expansions and approximately 29% to new customers. Customer attrition from enterprise and mid-market accounts averaged 0.9% during the third quarter, which compares to 1.1% in the second quarter of 2012. Small business attrition rates averaged 2.3%, which is down from Q2 attrition of 2.4%. During the quarter, we signed 163 total deals, compared to 139 last quarter and 184 deals in the third quarter of 2012. We also added 55 new enterprise and mid-market logos, which are a new record as well, and compares to 51 in the third quarter of 2012. Average deal size for all deals was $62,000, the average deal size for new customers was $53,000, while the average for existing customers signing up for an upsell or expanded business was $67,000. Similar to our booking metric, this metric generally represents contracts with committed, recurrent subscription fees and does not capture usage, onetime or performance-based contracts. Pay for Performance generated approximately 15% of total enterprise revenue and 9% of total revenue. Revenue coming from outside of the U.S. was approximately 32% of total revenue, with the U.K. representing our largest concentration outside of the U.S. This compares to 26% in last year's first -- third quarter, a portion of the international growth driven by the ENGAGE acquisition. The revenue breakdown by industry verticals was consistent with prior quarters: telecommunications made up 32%; financial services, 25%; retail, 14%; technology, 12%; and other, 17% for the quarter. We are continuing to see traction in terms of further developing strategic relationships with our existing enterprise customers. At the end of the third quarter 2013, we had 43 customers above $500,000 in annualized spend, which is up 3 from Q2 and we had 25 customers spending more than $1 million in annualized spend, which is up 2 from Q2. We believe there's further opportunity for our larger accounts to grow organically, especially with the continued trends we're seeing around digital engagement. Third quarter gross margins came in as anticipated at 77%, which is the same as in the third quarter of 2012, and compares to 76% in the second quarter of this year. In Q3, we began to amortize the purchased intangibles related to the Amadesa acquisition. And in Q4, we'll have our first full quarter of purchased intangible amortization from the Amadesa acquisition. We ended the quarter with a cash balance of approximately $77 million, which compares to $75 million in the second quarter. In addition, we have approximately $2 million of capital expenditures for the quarter related to servers and computers. Third quarter accounts receivable were $32.7 million, and our DSO metric for the third quarter of 2013 was 67 days. The increase in receivables was due to the timing of certain large payments from enterprise-level customers. In addition, a good portion of the increase in receivables is current. We had an adjustment to our tax rate due to the expansion of international operations, and the impact of transfer pricing allocations to those foreign operations. Therefore, our effective tax rate for the year will be 28%, producing a tax benefit. Now I would like to discuss the financial expectations for the fourth quarter and full year of 2013. Our current expectations for Q4 2013 are as follows: revenue of $46 million to $47 million; adjusted EBITDA of $0.09 to $0.11 per share; adjusted net income of $0.04 to $0.06 per share; and GAAP net income loss of $0.01 to a gain of $0.01 per share, with a fully diluted share count of approximately 56 million shares. Current expectations for the full year 2013 are revenue of $177 million to $178 million, adjusted EBITDA of $0.33 to $0.35 per share, adjusted net income of $0.19 to $0.21 per share, and a GAAP net income loss of $0.04 to $0.06 per share, with a fully diluted share count of approximately 56.3 million shares. Other full year 2013 assumptions include: the amortization of intangibles of approximately $3 million; stock compensation expense of approximately $12 million; depreciation expense of approximately $9 million; an effective tax rate of approximately 28%, producing a tax benefit; a cash tax rate of approximately negative 7%, resulting in a cash tax payment; capital expenditures of approximately $10 million; and we expect gross margin on a GAAP basis to be approximately 76%. As a reminder, our cost of goods sold continues to be sensitive to foreign currency fluctuations. Furthermore, as a percent of revenue for the year, we anticipate sales and marketing to be approximately 36%, G&A to be approximately 22%, and R&D to be approximately 20%. In addition, we opened an office in the Netherlands in Q3 and we will open additional offices in Japan and Germany in late Q4, early Q1 of 2014. That covers all the operational and revenue highlights. And now, if the operator could rejoin the call, we'd be happy to take questions from folks participating on the call. Operator?

[Operator Instructions] And our first question comes from the line of Richard Fetyko with ABR Investments.

Very strong bookings. Any help from deals that may have slipped from the first half of this year into the third quarter perhaps? Or to what extent would you attribute this strong bookings to perhaps the LiveEngage traction? And I realize that bookings can be lumpy, but it does seem exceptional. And then any comments on the sales productivity? I know that you kind of slowed the sales hiring this year versus last year, where you made a big push in sales force expansion. Curious if you're seeing the sales productivity gains that you're hoping for. And is there still room for improvement versus targeted productivity levels that you expect from them?

So we're happy with the $10.2 million of the bookings. As we've talked about in the past, we've added a lot of sales leaders and quota-carrying reps into the organization, and we've been pushing towards productivity. We're happy with the results of $10.2 million. And the sales force, as we talked about, went through our enablement training, training them around the LiveEngage value proposition and pushing the business forward. So we think the momentum is going in the right direction with our sales organization and their level of productivity. And we still think there's more opportunity to continue to push the productivity out of the sales organization.

And our next question comes from the line of Shyam Patil with Wedbush Securities.

Dan, I thought you were going to give 2014 guidance for a second there. I was getting excited. On the bookings growth or the bookings in general, was there anything onetime-ish that caused the strength, or is this kind of the right run rate to think about kind of going forward?

As far as the bookings are concerned, Richard -- the previous question did ask about deals being pushed out, we had talked about a couple of deals from Q1 that had been pushed out. We were actually able to close those in Q3. We don't give bookings guidance as a rule, but we're happy with the $10.2 million, and we expect to continue to -- for our sales organization to be productive. So we're happy with the $10.2 million.

Got it. That's helpful. And I think there were, I think, a couple of large deals that have slipped out from the first half. Did you guys close both of those deals?

Yes, that's what I was talking about. Yes, we did have a couple of deals from the first half of the year that did slip, and we were able to close those deals in the third quarter.

Great. And Rob, it seems like the platform implementation times were causing some issues earlier. Where would you say you guys are with that right now? Do you think you're mostly through those issues? And then separately, on the sales force side, do you think you're mostly through the sales force training, to where now the sales force is ready to sell the platform kind of as is?

So the first question, we're at, we got up to about 120 days on the, you remember, on the implementations, and we're down around 90. So we are down on implementations, and we feel like it'll stay there or improve. So we're very focused on that area. I think we have a new version of the platform coming out in the first half of next year, which I think is going to really even move, obviously, implementations to another place. So I think we feel good about where it is and how we move the organization and the platform and some of the changes we've made in the platform over the last couple of months. So I think that's one thing that's important. What was the second part of the question?

Just where you think you are with the sales force training on the new platform?

We have a tremendous amount of capacity in the team. They're just getting started. We did just train the enterprise sales force on the platform. The mid-market was trained in the early half of the year and small business got it also early in the year. Everyone's selling it. Everyone's out there with just LiveEngage. So that's one part. But there's so much capacity, I think, in the current people we have, that's why I don't really think we need to add a tremendous amount of heads to start moving the revenues. I think we just got to get our guys up to speed. The other thing is the customers. It's like we're educating them about the whole -- what we're doing with LiveEngage and how we're -- what we're selling. And so it's not just our reps. It's also marketing behind that. We started to focus on marketing. We've added more focus on that. We're doing a lot of these small seminars around the country, which seem to be working quite well. Working with even like Razorfish, marketing effort. So that's really some of the things that we're doing.

Great, and then just one last question. Given the strong bookings this quarter and given the 19% year-over-year growth ex small businesses, is this the right level of growth to kind of think about the business going forward, or do you think that kind of what you've already booked and your pipeline implies acceleration, kind of as we look forward?

Look, we have a goal of growing revenues and getting to another growth rate. I don't want to overstate anything. I think we had a very solid quarter. I think we're looking into the next quarter and Dan put the guidance out. We feel good about it. I'd like to enter the first -- enter the first of next year and really have some momentum, which I feel like we're starting to get. So we'll see where it goes. It's a good start. It's been a while since we've re-tooled everything. There were a lot of changes made here with people, as you know, and we're starting to see the green shoots of that. So I don't want to get overly excited, but I feel good about where we are today.

And your next question comes from the line of Brian Schwartz with Oppenheimer. Koji Ikeda - Oppenheimer & Co. Inc., Research Division: This is Koji for Brian. I just kind of wanted to circle back to the Razorfish partnership. I was wondering if you could talk a little bit about the sales opportunity there. And is your relationship with Razorfish a referral-type program or are they a reseller or is it something more than that? And how do you see your pipeline being affected by that relationship?

Razorfish is an important partner and we started to do something with them last quarter and signed an agreement. Razorfish can be a -- are going to be an important part of our goal, where actually channel strategy is going to be an important part of our goal going forward, and Razorfish is an important piece of that. We've done a couple of events with them so far, and we've been able to bring the right people to the table. From the marketing perspective, from the CIO perspective, it's starting to -- CMO, sorry, CMO's perspective, and starting to be thought leaders in space. And as Rob talked about on his script, it's a market or an area where we're trying to push our products, especially around digital engagement. So an important partner to us, and they're introducing us to some of the right people and creating the right audience and opportunities for us.

Yes, and I think the goal would be, with all these types of partners, is that they would eventually build a practice internally to support the platform, because there's a lot of work to be done on the creative side, especially around content targeting. We see -- as we talked about, we have some really good use cases around content targeting, but it needs creative. And so I think as the customers want a more holistic digital engagement strategy working with the marketing folks, they're definitely going to turn to agencies to help them. So if the goal is -- today, we do joint events, we sell jointly, but eventually, I'd like to see practices internally, where they've got groups supporting and selling the LiveEngage platform.

And your next question comes from the line of Michael Nemeroff with Crédit Suisse.

This is Kyle Chen in for Michael. I was wondering if you can comment relative to the fourth quarter guidance. I know it sort of looks conservative, being sub-10% at the midpoint. It's a little surprising, considering Q4 is supposed to be your strongest seasonal quarter. And just wondering if that's conservatism or if there's opportunities for upside here?

Well, we're comfortable with the guidance where we set it. I mean, we look at our monitoring, we look at a bunch of different metrics according to the business internally, but we're comfortable with where the guidance is and what we set out for the fourth quarter and the year.

And relative to LiveEngage for the enterprise customer base, now that your sales force is out there selling it, I guess, when do we expect to see some material revenue contribution from that, considering Q4 seasonality dynamics, and -- yes.

Well, so far in 2013, we're seeing some revenue contribution, but we expect the revenue contribution to start to happen in 2014, as we continue to sell to new customers and move existing customers over in the mid part of 2014. So we have a version of LiveEngage out in small business, so that's actually generating revenue for us today. But if we talk about the enterprise and mid-market, we've trained the sales force up in the third quarter, obviously, we're starting to sell in the fourth quarter, and we'll see some of those happen or start to go live and convert in the first quarter, second quarter of 2014.

So the goal is though, we will move the base into LiveEngage, so they will know -- in the future, there will not be a chat product standalone and there is none, really, today. You have to buy LiveEngage. So the entire base we want to move over onto the LiveEngage platform, because they get chat plus all the other products that we have integrated. So that's really the goal.

And your next question comes from the line of Mike Latimore with Northland Capital Markets.

So the strong bookings, so that -- just to be clear, you said the LiveEngage, you're sort of selling now, you expect some deals in the first quarter. So the strong bookings aren't from your traditional products, is that right?

So look at it as we're selling the LiveEngage platform today. So existing customers, they could be turning on additional seats or maybe we haven't converted them over to LiveEngage at this point, but any of our new bookings, they are for the LiveEngage. We are selling LiveEngage to those new customers.

Okay, got it. And I think last quarter, you mentioned that you're doing things to make it easier for current customers to convert to LiveEngage. I guess, any further enhancements in that regard?

I mean, we continue the conversion of the small business space, and every new customer that comes in only gets LiveEngage. So we're continuing on plan. As I mentioned, we're going to have another release early next year, which is a big release, because it'll take a lot of the experiences we have with getting LiveEngage out this year to, I think, another level. So we're kind of focused on that release. Like I said, it'll come out early next year.

And is there a standard pricing method for LiveEngage now, or does it vary by customer opportunity?

We have a methodology that we're using and testing in the market. And it still varies a little bit, but I think we're honing in on the structure on how we want to price the LiveEngage going forward.

And obviously, we've mentioned it before, but the pricing program for LiveEngage is a usage-based pricing model. By next year, early next year, we'd like to have it focused and a little clearer for you guys, so you can see how you can model it and stuff. But we're just finishing up testing the actual pricing model, but we're still selling seats out there, a little bit, but we're really focused right now on converting everything into a usage-based model.

Right. And just last question, I guess on the consumer side, any new view of the prospects for the consumer business there? I noticed Google has this Helpouts, I think it's called Helpouts service. Is that something that's competitive or complementary or an opportunity for you guys?

Yes, it's eerily -- it's pretty similar to that business. If you look at it, it's very similar. So I think it's kind of good. I think they're going to get a lot more -- they were on the TODAY show promoting it. There's going to be a lot more recognition of this. I think there -- we've got 30,000 experts. They've got a small group. I don't see it as much competitive right now. It is in the space, but that business is actually doing pretty good. And I think the exposure around this space could only help, and we're very focused obviously, on the tutoring, education area right now and expanding that. And the guys who are running it are doing a really great job in those key verticals, where -- the Google product, I looked at it, it's a little bit more loose, and there's like 3 experts and a couple of experts here, so we'll see where they end up with it, but definitely brought a lot of visibility, getting a lot of people asking me about it.

And your next question comes from Brad Sills of Maxim Group.

Average deal size was as high as it's been in a few years now. Was that a couple of the deals that slipped, some larger deals, or would you say it was kind of across-the-board increase in deal size?

The larger deals helped a little bit, but obviously from a pricing perspective, we're pushing LiveEngage pricing out there and adding pricing based on the relative value that we provide for our customers. So it was a jump up in the quarter, higher than our normal levels, and it was helped by some of those deals and how we're pricing as well.

Got you. And then on international, the mix was also a high here. Can you describe any countries where you saw better contribution? I know you mentioned Netherlands launched this quarter, and you've got Japan, Germany on deck. Were there any geographies or countries that kind of outperformed this quarter?

So the Asia Pacific region is actually doing fairly well for us. Some of that growth is driven by the ENGAGE acquisition that we did last year and as well as EMEA, so we're driving growth in EMEA. I think EMEA was a total of about 26% of our overall revenue. So we've got a good group in EMEA, and we've been expanding that region quite a bit. As I said, we opened up an office in the Netherlands. We'll have an office in Germany, and soon we'll have an office in Japan as well. So part of our goals at the beginning of 2013, end of 2012 was to be able to grow globally and expand globally. And as you guys know, that does take some investment, and we've been putting that investment into the business.

Your next question is from Jon Hickman with Ladenburg. Jon R. Hickman - Ladenburg Thalmann & Co. Inc., Research Division: Can you expand a little bit, are all your product modules now on the LiveEngage platform?

Yes, so everything is now on the LiveEngage. Also, there's no more LP Marketer. The only product that's outside of that is LP Insights, which is the product that takes the data from the chats and the structured data. So we've left that as a separate product right now. That'll eventually get baked in, but all the other things that we had, like ADE, LP Marketer, Voice, video, social, mobile, all of the integrations are now on the platform. Jon R. Hickman - Ladenburg Thalmann & Co. Inc., Research Division: So is there a particular module, apart from chat, which is your, obviously, your strongest suit, that marketers are aiming towards or wanting more than the others?

The content part is quite good. The content targeting, and I gave you some use cases, people are seeing some good results. Mobile is obviously in demand right now. So there's a lot of aspects of using the platform, the mobile capabilities of the platform. Social's kind of getting started. It's not huge right now. We've had Voice on the platform traditionally. And so I think the content side and the mobile side are the parts that are most in demand today. Jon R. Hickman - Ladenburg Thalmann & Co. Inc., Research Division: Can you comment on the competitive situation? Has anything changed? And then one last question. Vertically, are there any your verticals like picking up or falling off?

There, on the vertical side, we see some stuff on insurance in this area. We haven't as much focus on the government side yet, although there'll probably be a focus come next year. But the insurance ones has gotten interesting. There's some travel. We had News Corp. with media, which was a first for us, to have a subscription-based service around media, which was kind of interesting. So it's kind of the -- usual verticals are growing. Retail is growing nicely. Financial services is growing. So the usual verticals are doing well, and then we see some other small ones get started now. And the second part of the question? The competition? Jon R. Hickman - Ladenburg Thalmann & Co. Inc., Research Division: The competitive situation, has that changed at all?

Yes, it hasn't really changed. I mean, we still got -- there's Oracle and the acquisition they did a couple of years ago. There's some smaller guys, some people who they think compete with us, but they don't. And it's basically, we're out there, really, obviously we're leading in what we do with our core chat product, but we're really shaping a new story around digital engagement. And I think that's really starting to resonate, which is different from what most people are trying to sell today. So my goal is to really move us way far ahead of even the guys who have chat with intelligence -- certain levels of intelligence, to really game change this market, and I think we're very focused on that. So I think right now, things really haven't changed from what we've seen in the last couple of years. Jon R. Hickman - Ladenburg Thalmann & Co. Inc., Research Division: Okay. Dan, could you just -- you went really fast, could you just tell me what the total contribution from international was for total revenue growth percentage?

Outside the U.S. it was 32%. Jon R. Hickman - Ladenburg Thalmann & Co. Inc., Research Division: So international revenues were 30% -- 32% in total?

That's correct.

And your next question is from the line of Craig Nankervis with First Analysis.

I wonder, Rob, if you could just review for us -- there were hints about it in the Q&A here, but the moving of the customers -- the moving of the enterprise customers, and I guess maybe some mid-market, too, what the schedule for that is to move them over, and how you see that playing out? Maybe if we could start there, just spell that out.

Yes, so to sort of recap, there's actually not much to move. When you log in, you get a different interface. It's got chat, the traditional chat product that we have today. And then it's got all the other modules. So you really don't have to do much to move today. There are things we're going to want in the future. And so really next year, if you want to get, for instance, enhanced reporting and some other aspects of the platform, there are some things we're going to want to do when we're actually going to migrate you and some of your tags and things like that. But the way people are moving today is they'll just move -- basically log in and they get a new interface in the product. Except the tags are the place where we'll have some movement in the future. We have -- people have been changing out their tags over the last couple of quarters. With that, we can get a better enhanced data platform. For the enterprise customer, that platform will be available next year in the mid of next year. So they don't have to do anything today. They basically log in. They get all these different features. They use the current targeting capabilities that they use for chat to drive all these other interactions. So it's pretty painless right now to move them into the platform.

But there -- I guess I have 2 questions from that. But there is going to be some sort of transfer for enterprise next year? I'm still not perfectly clear, I'm sorry.

So you can get all the features of LiveEngage 1.3 without actually doing anything except just logging in, and we enable the account, and now you've got access to the other features, like the targeting of content and things like that. And you can do that today with just a login. So it's actually not much of a migration. We do want to use that. Obviously, we don't take enterprise customers and change their interface, and they log in, they go, "What is this?" We use it as a sales process, right, to tell the story. And we need to talk about the platform. The next stage of that is really around data and the data enhancements in the platform. That will take a change in tagging on their site. And so that's in next year. Where we'd like them to do is, but they can currently use the platform, the 1.3 version, by not changing anything except logging in and then we're educating them about using the platform. So those are the 2 stages.

It was my impression that when you rolled out the platform to the SMB portion of the market, that there -- that was -- was it as simple as you're describing it, because it seemed like there was a lot of focus, a lot of focus on the sales force's part to be sure that, that transition happened correctly. And it's sounding somewhat lighter weight here as you talk about it in this context, and I just want to understand that a little, too.

No, it's more -- I mean, we look at it as once we put them on the platform, there's a sales opportunity. So you really want to have the ability and not just, they log in and now they see this thing. What they'll end up doing is if you don't touch them or educate them about it, they'll just use the chat portion. So there's one part that's just the selling aspects -- the marketing aspects of the platform, and then there's the physicality of actually getting them to actually log in and what they have to do to do that. So we created this very painless process from the technical side. You log in and now you're enabled with LiveEngage, and now our salesperson will call you, a support person will speak with you and then educate you on the platform, and marketing will support that, too. So we've made it fairly seamless. That's why we've got thousands of customers up and running, very quickly, because of that. Once again, the big changes come when we look on the enterprise side, on the reporting side. We've done some very, I think, interesting things on the reporting, and enhancing that, and that's going to take us changing out tags on the site for them to get those reports. And so that's into next year.

On another subject that you touched on, I think, with the previous questioner. I want to just ask a little more about your outlook for mobile. How much of a catalyst you could see that being in the next 6 to 18 months? It was interesting to read the Grainger announcement, what, a couple of weeks ago, about them using you for their B2B business, and just wondered if you could paint a little picture of how you see mobile as a catalyst for you guys. How much the Look acquisition is playing into what you're doing.

Yes, so I kind of have an interesting -- not an interesting perspective, but I kind of look at mobile as something different from just engagement as a whole, and I'll explain that to be a little clear, which is that consumers are coming off all different devices, whether it's a laptop, mobile device, it's an iPad, whatever it is today. So we kind of -- the lines are very blurred. So when you look at our customers, some customers -- I was visiting in Europe, I was visiting, actually, a prospect, a big luxury retailer. 50% of their traffic comes from mobile devices. So 25% of their sales come from mobile devices. So they have a huge use case with mobile. We created a different experience for smaller physicality. So when you use a chat on an iPhone or an m-dot site, it's got a different look than on a, obviously, a web browser on a laptop. But it's a very integrated approach. It's very necessary right now, like when we go into a deal, they want to know what's mobile, because everyone's in mobile in some way, shape or form. It could be 50% of their traffic. It could be a smaller portion. It could be 6% of sales, which is kind of the average right now across the base. So it's really important, just so they can see what the future of that looks like, especially on the retail and banking side and telco side. So these 3 verticals are heavy mobile users. So for us, if we don't have it -- and Look.io was so important because the guys who built that company has such a vision around it. And if you go to our website with a mobile device, you'll see the chat. It looks very different than the chat you would get on your browser, and you'll see what's been created. It's a different experience. We kind of look at it as a very blurred experience. It's just another device. It's got it -- you have the same enhancements and features as our core, as what happens when you go to the web. And so it's more -- much more of a blurred space, but depending on the customer, it's important. The importance of it could mean a deal or not a deal. So that's why we bought Look.io.

So if I were to summarize, it sounds like you're -- I mean, it's certainly a necessary component of the story you tell. And I guess you would -- it sounds like you're sort of mixed as to how key it could be for you in the coming 4 to 6 quarters. Maybe in some deals, yes, in some deals, no. Is there any...

Yes, but definitely not mixed about it. If we don't -- everyone's talking mobile, whether they're using today. If we didn't have it, it would be an impediment for a sale.

And we have no further questions in queue at this time.

Thank you, everybody, and we'll see you on the Q4 call in the new year.

Thanks, everybody.

Thank you. This does conclude today's conference call, and you may now disconnect.