LivePerson Inc (LPSN) 2013 Q3 法說會逐字稿

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. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (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 would like to remind listeners that during the conference call, comments that we make regarding LivePerson that are not historical facts and are forward-looking statements that are subject to risks and uncertainties, which could cause some 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. The results that we report today should not be considered 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 & 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. Thanks everyone for joining us today. During the third quarter, we continued to execute on our overall strategic plan, empowering our sales team, and 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 roll-out of our LiveEngage platform, a growing number of customers are leveraging the broader capabilities of our solutions, and driving greater business value to our multi-channel engagement strategy. A great example during the quarter was our expanding relationship with 02, which is one of the UK's largest telcos, O2 is redefining its customer service offerings, shifting more to a digital engagement strategy, to better meet the demands of its 23 million customers. They are leveraging a broad set of features on the LiveEngage platform, including LiveChat, targeted content, rich media and mobile engagements to connect with an increasing number of visitors in the digital space. They are currently hosting about 700,000 interactions per month on our platform, and that is about an interaction every four seconds, 24 hours a day, seven days a week.

What is even more encouraging is the penetration we are seeing into both net and new accounts and new verticals with the LiveEngage value proposition. During the quarter we closed a deal with NewsUK, which is a part of News Corp. The initial launch was on their Times digital property, which is a compelling event for NewsUK, as they wanted to be the first in their industry to offer web and mobile chat to sell online subscription. The scope of the relationship quickly increased with the launch of their new SunPlus digital entertainment platform. The 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 and new verticals.

Recently, we started creating a series of regional events around the country called Aspire To Lead. We had 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 Bank West of Australia, and a strong group of thought leaders among our customer base. Snapfish is a customer presented how they are using data that would capture off the platform to drive the voice of the customer in value into the overall business. For more than 90 million online customers in 12 countries, it is essential they understand how to engage them meaningfully in the digital channel. Millions of customers produce an enormous amount of valuable data. Snapfish deployed LP Insights to aggregate and analyze all of this data, and better understand the paying points in their customer's journey. The results have been impressive.

LP Insights has been able to help the Company improve sales per chat hour by 48%, average order value is up by 10% and the aging 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 are seeing content-based engagement double, with new SMB clients that are on boarding with LiveEngage now.

In addition, we are driving more user-friendly marketing to our SMB customers with webinars, like a series called 60 Seconds to Success, which educate customers on practical use cases, such as shopping cart abandonment, and we are using these online webinars really as a way to drive reduction implementation cycles and obviously more usage of the overall platform. Another customer [SomeWeb], it is an online travel company in Europe, has been driving great success after using the content portion of the LiveEngage platform. They are using the targeting capabilities around content.

Like most eCommerce websites, they reached their peak in buying advertising at a rate that would be cost-effective so now we have helped them really design a way to create targeted campaigns, to address the needs of increasing conversion rates from the site. We targeted about 65% of their traffic with these personalized targeted offers, and in less than two months, their online sales grew by 14%, conversion rates with engaged visitors grew 34%, which resulted in an overall rate increase of 22%.

In our pay for performance business, two 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 that PFP model, we were able to scale labor at a greater rate, and scale obviously the peaks of these businesses, and how they launch and grow their online traffic. The two proof of concepts we mentioned the last quarter, converted into full contracts, and one actually was our first PFP mid-market customer. We are 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 and some of the new things we are doing.

The accelerating demand for digital engagement is something we are seeing on a global scale, as we continue to expand our presence outside of the US market. In Australia, we added eight new enterprise deals in Q3, which was our best net new customer quarter yet. We are now working with five of the largest big banks in that region, and as online banking grows, there is a big opportunity to really build out greater digital adoption programs with these customers. As big brand retails 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 are accelerating our growth in that region, in that country. We continue to build out our infrastructure and head count to support our expansion plan. We launched our first B-to-C customer during the quarter. Jet Star Airlines and signed our first banking client. During the first weeks of December, we will also be hosting an event in Tokyo with some partners, and about 100 potential customers, and so that will be a big kickoff of our partnership in Japan.

Recently, we hosted here in New York, a Partner Day. We had about 50 partners attend from North America, Latin America, Japan, and other regions around the world, focused around our BTO firms, our bid processing outsourcing companies, like the call centers, digital agencies, ISBs and other resellers. As we continue to scale our business, increasing important for us to build strong relationships with the partners. During the quarter we doubled our channel bookings, adding 27 net new logos. We have 120 year-to-date.

We also started to see Brazil open up for signing eight new deals in the region with a partner down there. We started to invest in the channel operations at the beginning of the year. We think it is important if we are really going to accelerate and take the revenues to another place, to go beyond direct sale, and that is part of the strategic plan that we placed to the investors about a year and a half ago.

We are also continuing to look at new buyers within organizations, the Gartner estimates in 2017, the CMO will have a lot more power over budgets, than even the CIO, so we are really looking at targeting marketers with the platform, and our relationships in the digital marketing space and digital agencies like Razorfish is really important for us. Last quarter, we announced a partnership with Razorfish. We are out there joint selling with them. We are doing joint marketing activities. So I think this partnership is important to us. It is also something that we are 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. 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 best-of-breed products out there, and it is really side by side with some of the technologies they already have in their call centers today.

So really over the past two years, we have made important changes to obviously our people here. The products we are delivering and how we are delivering them. In order to scale this Company to a different level. I am really pleased about this quarter and the inroads we have made with our existing base, with new customers and really moving toward 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 would also like to mention that this year will mark our 12th hosting of the Feeding NYC event here in New York City. It is a day where LivePerson employees and volunteers, and some of you who are on the 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 have delivered about 25,000 meals, and that means we have touched 25,000 families, and countless others since we started this after 9/11. If you are in the area, I would really encourage you to come down Chelsea Piers on the 26th of November, and really help us get out there and do this. It starts at about 6.00 AM in the morning, and we go until about 6.00 PM at night. To find out more information, go to FeedingNYC.org and you can see how you can help us.

With that, I would 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 existent customers, as well as expand our market reach internationally and through channel partners. In addition, we continue to build momentum behind the LiveEngage roll-out. We completed our power sales enablement program, the trend and ready global sales team on the LiveEngage value proposition. And we received valuable feedback from our customer advisory board and partner base, following a series of many Aspire events that we hosted in New York City.

We were pleased with the quarter as revenue, adjusted EPS, and adjusted EBITDA exceeded for the quarter, while GAAP EPS came in 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 three 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 for the third quarter of 2013, compared to income of $0.03 per share in 2012. 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, 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 or current subscription fees, and does not capture usage or performance-based contracts.

The breakdown of enterprise and mid-market bookings was approximately 71% for existing customer expansions, and approximately 29% for new customers. Customer attrition for 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 per existing customer signing up for an upsell or expanded business was $67,000. Similar to our booking metric, this metric generally represents contracts with committed, recurring subscription fees, and does not capture usage, one-time, 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 US was approximately 32% of total revenue, with the UK representing our largest concentration outside of the US. This compares to 26% in last year's third quarter for the 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 at 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 is further opportunity for our larger accounts to grow organically, especially with the continuing trends we are seeing around digital engagement.

Third quarter gross margins came in as anticipated of 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 will 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 had approximately $2 million of capital expenditures for the quarter related to servers and computers.

Third quarter Accounts Receivable is $32.7 million and our DSO metric for the third quarter of 2013 was 67 days. The increased in Receivables is 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 have 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. The 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, 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 subject to foreign currency fluctuation. 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 opened additional offices in Japan and Germany in late Q4, early Q1 of 2014.

That covers all of the operational and revenue highlights, and now if the operator can rejoin the call, we would be happy to take questions from folks participating on the call. Operator.

(Operator Instructions). We will pause for a moment to compile the Q&A roster. Our first comes from the line of Richard Fetyko with ABR Investments.

Hello?

Richard, your line is open.

Sorry, guys. Can you hear me?

Yes.

My bad. Congratulations on the numbers. Very strong bookings. Any help from deals that may have slipped from the first half of this year into third quarter perhaps, or to what extent would you attribute the strong bookings to perhaps the LiveEngage traction, and I realize the bookings can be lumpy, but it does seem exceptional. Any comments on the sales productivity?I know you kind of slowed the sales hiring this year versus last year. You made a big push in sales force expansion. Curious if you are seeing the sales productivity gains that you were hoping for?Is there still room for improvements versus the targeted productivity levels that you expect from them? Thanks.

So we are happy with the $10.2 million worth of bookings. As we have talked about in the past, we have added a lot of sales leaders and court accounting reps into the organization. And we have been pushing toward productivity. We are happy with the result in the $10.2 million,and the sales force as we talked about. We went through our enablement training. Training them around the LiveEngage value proposition, and pushing the business forward. We think the momentum is going in the right direction with our sales organization, and the level of productivity and we still think there is more opportunity to continue to push the productivity out of the sales organization.

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

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

As far as the bookings are concerned, Richard on the previous question asked about deals being pushed out. We 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 booking guidance as a rule. But we are happy with the $10.2 million. We expect to continue to for our sales, to be productive. So we are happy with the $10.2 million.

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

Yes. That is what I was talking about. We did have a couple of deals from the first half of the year that did slip. We were able to close those 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 are mostly through those issues? And then separately, on the sales force side, do you think you are 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 were asked, we got up to about 120 days on the implementations, and we are down around 90. So we are down on implementations, and we feel like it will stay there or improve. So we are 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 the implementations to another place. So I think we feel good about where it is, and how we have moved the organization, and the platforms, some of the changes we made in the platform over the last couple of months. So I think that is one thing that is 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 are 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 was also early in the year. So everyone is selling it. Everyone is out there with just LiveEngage. That is one part but they have so much capacity in the current people we have. That is why I don't think we need to add a tremendous amount of heads to start moving the revenues. We just have to get our guys up to speed.

The other thing is the customers. We are educating them about the whole what we are doing with LiveEngage, and how we are, what we are selling and so it is not just our reps, it is also the marketing behind that. We started to focus on marketing. We have added more focus on that. We are doing a lot of these small seminars around the country, which seem to be working quite well. Working with even like Razorfish, marketing efforts. So that is really some of the things that we are doing.

Great. And then just one last question. Given the strong bookings this quarter, and given the 19% year-over-year growth X 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 have already booked, and pipeline implies acceleration kind of as we look forward?

Yes 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 are looking into the next quarter and Dan put the guidance out. We feel good about it. I would like to enter the first of next year and really have some momentum, which I feel like we are starting to get. So we will see where it goes. It is a good start. It has been a while since we retooled everything. There were a lot of changes made here with people as you know. We are starting to see the green shoots of that. I don't want to get overly excited, but I feel good about where we are today.

Great. Thanks, guys and congratulations.

Thank you.

Your next question comes from the line of Brian Schwartz with Oppenheimer.

Thanks for taking my question. This is Koji [Ikeda] for Brian. I just wanted to circle back to the Razorfish partnership. I was wondering if you can talk a little bit about the sales opportunity there, and is your opportunity with Razorfish a referral-type program, or are they a reseller, or something more than that, and how two 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. Agencies are going to be an important part of our goal. It will be an important part of our goal going forward. And Razorfish is an important piece of that. We have done a couple of events with them so far, and they have been able to bring the right people to the table. From the marketing perspective and the CIO perspective, and starting to give thought to the CML side, the CMS perspective and starting to be thought leaders in that space. As Rob talked about on his script, it is an area where we are trying to push our products, especially around digital engagement. So an important partner to us. They are introducing us to some of the right people, and creating the right audience and opportunities for us.

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

Alright. Thanks for that. Great quarter. Thanks for taking my questions.

Your next question comes from the line of Michael [Nim] with Credit Suisse.

This is [Karl Chen] in for Michael. Thanks for taking the question. Just wondering if you can comment relative to the fourth quarter guidance. I noticed it sort of looked conservative being sub-10% at the mid-point. It is a little surprising considering Q4 is supposed to be your strongest seasonal quarter. I wonder if that is conservatism, or are there opportunities for upside here?

We are comfortable with the guidance where we set it. We look at our run rate, at a bunch of different metrics in the business, internally. But we are comfortable with where the guidance is and what we setup for the fourth quarter and the year.

Okay. 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--?

So far in 2013, we are 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. That is actually generating revenue for us today. As we talk about the enterprise and mid-market, we trained the sales force up in the third quarter. Obviously we are starting to sell in the fourth quarter, and we will see some of those happen or start to go live and convert in the first quarter, second quarter of 2014.

The goal is we will move the base into LiveEngage so they will know in the future, there will not be a chat product stand alone. There is none really today. You have to buy LiveEngage. The entire base we want to move over on to the LiveEngage platform, because they get chat plus all the other products that we have integrated. That is really the goal.

Great. Thank you.

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

Great. Congratulations on the results there. So the strong bookings, so just to be clear, the LiveEngage is sort of selling now. You expect some deals in the first quarter. The strong bookings are on some of your traditional products, is that right?

So look at it that we are selling the LiveEngage platform today. So existing customers they could be turning on additional seats. Maybe we haven't converted them over to LiveEngage at this point. But any of our new bookings, we are selling LiveEngage to those new customers.

Okay, got it. I think last quarter, you mentioned that you are 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 are continuing on plan. As I mentioned, we are going to have another release early next year which a big release because it will take a lot of the experiences we have with getting LiveEngage out this year to another level. So we are kind of focused on that release that will come out early next year.

Got it. And is there a standard pricing method for LiveEngage now? Or does it vary by customer opportunity?

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

Obviously, we have mentioned it before, but the pricing program for LiveEngage is a usage based pricing model. By next year, early next year, we would 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 are just finishing up testing the actual pricing model. We are still selling seats out there a little bit. But we are really focused right now on converting everything into a usage-based model.

Last question. I guess on the consumer side, any new view of the prospects for the consumer business there? I noticed Google has this help out service. Is this something that is competitive, or complementary, or an opportunity for you guys?

It is pretty similar to that business. If you look at it, it is very similar. I think it is kind of good. I think they are going to get a lot more recognition, they were on The Today Show promoting it. There will be a lot more recognition of this. I think we have got 30,000 experts. They have got a small group. I don't see as much competitive right now. It is in the space. But that business actually is doing pretty good, and I think the exposure around this space can only help. We are very focused obviously on the tutoring education area in 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 is a little bit more loose. There are like three experts and a couple of experts here. So we will see where they end up with it. But it definitely brought a lot of visibility to getting a lot of people asking me about it.

Great. Thanks.

Your next question comes from Brad Sills of Maxim Group.

Hi guys. Thanks for taking my question. Average deal size was as high as it has 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 an across the board increase in deal size?

Larger deals helped a little bit, but obviously from a pricing perspective, we are 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. It was helped by some of those deals, and how we are pricing as well.

Got you. Thanks Dan. 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 have got Japan, Germany on deck. 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, as well as EMEA, so we are driving growth in EMEA, and I think EMEA was a total of about 26% of our overall revenue. So we have got a good group in EMEA. We have been expanding that region quite a bit. As I said, we opened up an office in the Netherlands. We will have an office in Germany, and soon we will have an office in Japan, as well. So part of our goal 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. We have been putting that investment into the business.

Great. Thanks Dan. Congratulations.

Thank you.

Your next question is from Jon Hickman with Ladenburg.

Hello. Thanks for taking my call. Can you expand a little bit,are all of your products, modules, now on the LiveEngage platform?

Yes. So there is no more LP Marketer. The only product that is outside of that is LP Insights, which is the product that takes the data from the chats and the structured data, so we have left that as a separate product right now. That will eventually get baked in, but all of the other things we had, like ADE, LP Marketer, voice, video, social, mobile, all of those integrations are now on the platform.

So is there a particular module apart from chat, which is obviously your strongest suit, that marketers are aiming toward, or wanting more than the others?

The content part is quite good. The content targeting I gave some use cases, people are seeing some good results. Mobile is obviously in demand right now. So there is a lot of aspects of using the platform, the mobile capabilities of the platform. Social is kind of getting started. It is not huge right now. We have 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.

Could you comment on the competitive situations, anything changed, and then one last question, vertically,are any of your verticals like picking up or falling off?

On the vertical side, we have seen some stuff on insurance in this area. We aren't as much focused on the government side yet although there will probably be a focus next year. The insurance one has gotten interesting. There is some travel. We had News Corp. with media which is a first for us, to have a subscription-based service around media which was kind of interesting. So it is usual verticals are growing. Retail is growing nicely. Financial services is growing. So the usual verticals are doing well. We have seen some other small ones get started now. Second part of the question? Competition?

The competitive situation, has that changed at all?

Yes, it hasn't really changed. We have still got, there is Oracle and the acquisitions they did a couple of years ago. There are some smaller guys. Some people that they think compete with us but they don't. And it is basically we are out there really, obviously we are leading in what we do with our core chat product. We are shaping a new story around digital engagement. That is 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, a certain level of intelligence, to really game change the market. I think we are really focused on that. I think that right now things really haven't changed from what we have seen in the last couple of years.

Okay. Dan, could you just, you went really fast. Could you just tell me what the total contribution from international was? For total revenue? Global percentage?

Outside the US, it was 32%.

So international revenues were 32% of total?

That is correct.

Okay. Thank you.

Thanks, Jon.

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

Good evening. Thank you. Nice quarter. 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 is actually not much to move. When you login, you get a different interface. It has your traditional chat products that we have today. Then it has got all of the other modules. You really don't have to do much to move today.

There are things we are 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 will want to do when we are actually going to migrate you, and some your tags, and things like that. But the way people are moving today is they just move basically login and they get a new interface in the product. Like I said, the tags are the place where we will have some movement in the future. 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 just login, they get all of these different features. They use a current targeting capabilities as chat to drive all of the other interactions. It is pretty painless right now to move them into the platform.

But I guess I have two questions from that. There is going to be some sort of transfer for enterprise next year? I am still not perfectly clear. I am sorry.

So you can get all of the features of LiveEngage 1.3 without actually doing anything except just logging in and we enable the account, and now you have 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. It is actually not much of a migration. We do want to use that. Obviously we don't take enterprise customers and change their interface. They login and they go, what is this? We use it as a sales process to tell the story. 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 is next year where we would like them to do it, but they can currently use the platform, the 1.3 version by not changing anything except logging in. And then we are educating them about using the platform. Those are the two stages.

It was my impression that when you rolled out the platform to the SMB portion of the market, was it as simple as you were 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 transition happened correctly, and it is sounding somewhat lighter weight here, as you talk about it in this context?I want to understand that a little, too.

It is more, I mean we look at it, once we put them on the platform, there is a sales opportunity. So you really want to have the ability of not just they login and now they see this thing. What they will end up doing is if you don't touch them or educate them about it, they will just use the chat portion, so there is one part that is just a selling aspect, the marketing aspects of the platform, and then there is the physicality of actually getting them to actually login, and what they have to do to do that. So we created this very painless process from the technical side, you login and now you are enabled with LiveEngage and now a 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 have made it fairly seamless, that is why we have 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 have done some very, I think interesting things on the reporting and enhancing that, and that is going to take us changing out tags on the site, for them to get those reports, so that is into next year.

Thank you for taking me through that. On another subject, and it touched on I think with the previous questioner, I wanted to 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 Granger announcement a couple of weeks ago, about them using you for their B2B business. Just wondered if you could paint a picture ofhow you see mobile as a catalyst for you guys, how much the Look acquisition is playing into what you are doing?

Yes, so, I have an interesting perspective, but I kind of don't look at mobile as something different from just engagement as a whole. I will explain that to be a little clearer which is that consumers are coming off all different devices, whether it is a laptop, mobile device, it is an iPad, whatever it is today. So we kind of, the lines are very blurred. So when you look at our customers, some customers, like I was visiting in Europe, I was visiting a prospect, a big luxury retail, 50% of their traffic comes through mobile devices. 25% of their sales come from mobile devices. They have a huge use case with mobile.

We have created a different experience for smaller physicalities. When you use the chat on an iPhone or an MDOT site, it has got a different look than a web browser on a laptop. But it is a very integrated approach. It is very necessary right now when we go into a deal, they want to know what is mobile, because everyone is in mobile in some way, shape, or form. It could be 50% of their traffic. It could be a small portion. It could be 6% of sales is kind the average right now across the base. So it is really important just so they can see what the future of that looks like.

Especially on the retail and banking side and telco side. These three verticals are heavy mobile users. So for us, if we don't have it, and Look it is so important because the guys who built that company have such a vision around it. If you go to our website with a mobile device, you will see the chat. It looks very different than chat you would get on your browser. You will see what has been created. It is a different experience. We kind of look at it as a blurred experience. It is just another device. It's got to have the same enhancements and features as our core, as what happens if you go to the web. So it is more, much more of a blurred space but depending on the customer, the importance of it could mean a deal or not a deal. So that is why we bought LookIO.

So if I were to summarize, it sounds like it is a necessary component of the story you tell, and I guess you would, it sounds like you are sort of mixed as to how key it could be for you in the coming four to six quarters?Maybe in some deals, yes. Maybe in some deals, no.

Definitely not mixed about it. If we don't, everyone is talking mobile whether they are using today. If we didn't have it, it would be an impediment to sales.

Right. I get that much. Okay. Thank you.

We have no further questions in queue at this time.

Thank you everybody. We will 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.