LivePerson Inc (LPSN) 2014 Q2 法說會逐字稿

Good afternoon. My name is Chanel, and I will be your conference operator today. At this time, I would like to welcome everyone to the LivePerson Q2 2014 financial results conference call.

All lines have been placed on must to prevent any background noise. After the speakers' remarks, there will be a question and answer session. (Operator instructions.)

On the call today, we have Dan Murphy, Chief Financial Officer, and Rob LoCascio, Chief Executive Officer. I will now turn the call over to Mr. Murphy.

Thanks very much. 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 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 our earnings release by visiting the Investor Relations section of our website.

We will start the call with a review of the financial and operational highlights, and then Rob will discuss the go-forward vision for LivePerson.

For the second quarter of 2014, revenue exceeded our guidance range. In addition, our GAAP, EPS, adjusted EBITDA, and adjusted net income were all at the high end of our guidance range.

Our sales team delivered on our largest bookings quarter in Company history. Bookings were $10.8 million, which is 53% growth over Q2 of 2013.

Second quarter revenue was $51.1 million, an 18% growth over the same quarter in 2013. B2B revenue was $46.5 million, and revenue from our consumer segment was $4.5 million.

Revenue from our enterprise and midmarket segment, which excludes small business, grew 23% over the second quarter of 2013. Based on our strong bookings and revenue results for the first half of 2014, we are increasing our annual revenue guidance for this year to $204 million to $207 million from previous guidance of $199 million to $204 million.

In Q2, approximately 69% of our bookings came from existing customers, and 31% came from new customers. Our trend of selling larger dollar value deals to new and existing customers continued in Q2. Our average deal size was $82,000 for all deals.

In addition, in the second quarter we signed seven deals greater than $500,000, of which one was for more than $1 million annually, and several were multiyear commitments.

We included in our bookings' metrics new or incremental contractual commitments for the first year of the contractual relationship in either new or existing customers for recurring subscription-based fees, but exclude from such amount nonrecurring fees such as one-time implementation costs or one-time consulting fees.

The bookings' metric generally does not include or represent usage-based and/or pay for performance-based contracts, month-to-month contracts, transaction-based services, or subsequent years of multiyear contractual agreements.

As in the past few quarters, during Q2 we continued to expand relationships with new and existing customers. In the second quarter of 2014, we had 51 customers spending more than $500,000 on an annualized basis. This is up from 40 in Q2 of 2013. In addition, we have 27 customers spending more than $1 million annually, up from 23 in Q2 of 2013.

We signed 132 deals during the quarter, including 37 new enterprise and mid-market clients. The average deal size for new customers was $91,000, while the average for existing customers signing up for an upsell or expanded business was $78,000.

Customer attrition for enterprise and midmarket accounts averaged 0.8% per month compared to 1.1% in Q2 of 2013. Small business attrition rates averaged 1.8% per month compared to 2.1% in Q2 of 2013.

Pay for performance generated approximately 14% of total enterprise revenue (inaudible - technical difficulties) of total revenue.

The revenue breakdown by industry verticals was consistent with prior quarters. Telecommunications made up approximately 30%, financial services approximately 25%, retail approximately 16%, technology 15%, and other approximately 14%.

Revenue coming from outside US was approximately [34%] of total revenue, with the UK representing our largest concentration outside the US.

We ended the quarter with a cash balance of approximately $71 million, which compares to $79 million at the end of the first quarter. We had approximately $2.9 million in capital expenditures for the quarter related to servers, computers, and the build out of office space. We also used cash for the acquisition of Synchronite, and spent approximately $4.3 million repurchasing stock in the second quarter.

Year-to-date in 2014, we have repurchased approximately 1.2 million shares. And over the last 18 months we have purchased approximately 3.6 million shares, or approximately 6% of our outstanding shares. We recently authorized an additional $10 million for the purpose of repurchasing stock.

Second quarter accounts receivable came in at $33.9 million, and our DSO metric for the second quarter was 60 days. The increase in DSO is related to us selling larger deals in addition to the increase in payment terms for some of our largest customers.

The second quarter tax rate was 16%.

From a bottom line perspective, our second quarter adjusted net income per share was $0.06, loss per share was $0.02, and adjusted EBITDA per share was $0.09, all of which were at the high end of our guidance range.

That covers the highlights in the quarter. Now we'd like to discuss the financial expectations for the third quarter and full year of 2014.

As we discussed on our last call, during 2014 we will continue to invest in the business and the rollout of our LiveEngage platform.

Our current expectations for Q3 2014 are as follows. Revenue of $52 million to $53 million; adjusted EBITDA of $0.09 to $0.11 per share; adjusted net income of $0.05 to $0.07 per share; and GAAP EPS loss of $0.05 to $0.03 per share, with a fully diluted share count of approximately 55.4 million.

Current expectations for the full year 2014 are increasing our revenue guidance to $204 million to $207 million from previous guidance of $199 million to $204 million, adjusted EBITDA of $0.37 to $0.41 per share, adjusted net income of $0.21 to $0.25 per share, and a GAAP EPS loss of $0.11 to $0.07 with a fully diluted share count of approximately 55.6 million.

Other full year assumptions include the increasing amortization of intangibles to approximately $5 million related to the two acquisitions completed in the first half of the year, stock compensation expense of approximately $14 million, depreciation expense of approximately $10 million, and an effective tax rate of approximately 20%, capital expenditures of approximately $11 million. We expect gross margin on a GAAP basis to be approximately 75%.

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 invest in the business. And we anticipate sales and marketing to be approximately 38%, G&A at approximately 20%, and R&D to be approximately 20%.

That covers all the operational and revenue highlights. Now I'd like to turn the call over to Rob, who will provide his insights surrounding the market and LivePerson's strategic direction.

Thanks, Dan, and thanks, everyone, for joining us on the call. We had another strong quarter as we achieved our 48th consecutive quarter of growth, and I want to thank the team for their hard work and commitment to our strategy and execution on the vision.

Over the past 24 months, I've been talking about how there's been a real change between consumer and brand in the digital world, and the consumer is definitely in charge. And the consumers' voice is a massive voice, and it could be either very positive or very negative as an impact on companies.

Now I remember my first job, and my boss said to me if you don't do good for a customer and they're unhappy, they can tell 10 of their friends. And I remember, wow, that's a big number. But, when you look at today, if a customer is unhappy, they can tell millions of people instantly.

And there's a great case study of this. Only two or three weeks ago, if you were following, a Comcast customer decided that he was going to tape an eight-minute call that he was having with customer support. He was trying to cancel his service. And I won't go into the details. You should really Google it.

There's actually like tens of thousands of things written about it right now. It was a terrible call, and the customer support rep wouldn't let him cancel. It border-lined on funny, but the result was this.

In a matter of days, five million people listened to that recording. And instantly, every network picked it up, played it, CNBC, CNN. And even like Forbes wrote an article entitled Comcast PR Nightmare Can Befall Midsized Companies: Your Company Could Be Next.

So, when you think about digital, it presents a great challenge and opportunity for brand. But, the consumer -- as I've said the last couple of quarters, the consumer, they can communicate with their friends and family instantly and they can connect through messaging and through social and mobile.

But yet, when it comes to connecting with a company, we're back in the Stone Ages. They still have to dial up an 800 number. They still have to sit in a queue and they still feel disconnected.

Our mission at LivePerson is to create meaningful connections in the world. This was something we defined 2.5 years ago. And it's what the consumer expects from the brand.

And if Comcast was using our platform, which they're not today, but hopefully in the future they will, I believe the situation would have been very different, and I'll go through how that would be different on the LiveEngage platform.

First of all, as this consumer would have been chatting and interacting with the agent, we would see that there was negativity in the conversation. And that conversation could be flagged instantly to a customer manager, and that manager could intercede into the chat and help and guide that conversation instead of what happened, which was this was a customer support rep on their own. And even if that wasn't caught and the consumer posted it to Twitter like this consumer did, we would see that instantly.

The brand can go ahead and see what's going on in social through the platform and instantly re-Tweet back and say, look, wow, you've had a real issue. Chat with me now. I'm here for you. I want to help you.

And then, after all of that would have taken place, we could have proactively engaged the consumer through mobile. Maybe they've got a Comcast app on their mobile device. We could have engaged them through that if we missed them on Twitter.

And let's say we got them. Well, what would happen eventually is we'd saved all that data. We'd save all those conversations, and all of that goes through a process that becomes learnings for the company.

So, brands are understanding now that the consumer is in charge, and that's what's changed for the opportunity at LivePerson. We're becoming much more strategic to our customers in shaping their digital strategy because of one simple fact.

Nineteen years ago we started the company, and the vision has always been about connecting people in the digital world. We're not a call center company trying to go digital or a 800-number company trying to move into the digital space.

We started here and we understand it, and our customers know that and they want to work with us. And what's really changed is the real understanding from the CEOs. I've been out meeting with our largest customers, and what I hear now in the last really six to 12 months is that our CEO at our company has decided that what's important is our connection with customers. And I've got three great examples of this.

One of our customers in Asia, they're a very large telco there. If you look at the CEO's compensation, it's public. Twenty to 30% of his compensation is tied to what they call a Net Promoter Score. Now, the Net Promoter Score is a score that basically is the happiness of his customer base. And he literally is getting 20% to 30% of his salary based on this.

There's another great story I heard. I was at one of our large retail customers who sells home improvement products, and they were talking about their CEO. In front of thousands of the managers -- every year he brings in his managers from the stores, talks to them, and he opened it up by reading a chat transcript, a chat transcript that was generated on our platform.

And people, they said, were in tears and there was a big emotion about it, because it showed the relationship between a customer in need and the contact center person who was helping them through it. And they actually delivered an item to the home of this relative who was sick, and he read that with pride.

And so, when you think of the CEO and what we're doing -- and we've had some good starts with the strategy. We have one of the largest banks in the UK, in which we've been working with them strategically. We've been implementing a strategy of digital engagement, and what we've seen is some great results.

First is, if you use our platform and you use all the parts of it, we see things like, in their case, customer satisfaction is at 90%. With e-mail, let's say, it's 70%, with call, it's 80%. But, when they went to a digitally engaged environment, customer satisfaction was 90%.

We're also targeting to take half a million 1-800 calls out of the system by the end of the year. And that's tens and hundreds of millions of dollars of cost that we can take out of the system.

And finally, even self-service, people just went onto the website and tried to fill out a mortgage application at the bank now because they could see that there was someone there to help them if they would have an issue. They increased conversion rates by 4%.

This bank, and the CEO defined this, it isn't about being the largest bank in the UK. He wants them to be the number one bank in customer service because he realizes that's what matters.

So, as we become more strategic with our large customers, the net effect and what we're seeing right now is our deal sizes are getting larger. Our opportunity is larger.

And what are we targeting? It's voice. The 1-800 number and all of those calls that are happening in the world and 90% interactions at a contact center still through the old way are moving to us. And our platform is ready for it.

Now, the platform is about scale. We built LiveEngage because we wanted a better way to scale the ability to work with our customers. So, with the enterprise, they can add new interactions, they can add content, they can add mobile instantly, and they can also go after small and medium-sized businesses. We recently launched, if you go to our website, a whole new website in which anyone can go, put a credit card in, and they can start using LiveEngage within minutes.

So, what we look at the opportunity there is that if you're buying keywords, and there's millions of companies that are buying keywords on Google, let's say, they're going to want a way to interact with their consumers. And that's the opportunity with LiveEngage on the small and mid-sized businesses.

When we look also at the platform, it's going to allow us to really also do integrations for distribution, like Web hosting companies. We want LiveEngage -- when you set up a website, one click, you can interact with your consumers.

As a matter of fact, during the quarter we did one of our largest distribution deals, a three-year deal, with a company that has on an online banking platform for small to medium-sized businesses. And they're giving access to these thousands of small banks the ability to interact with their customers through their platform using the LiveEngage technology.

So, on one side, there's everything about the business and our customers, and we talk a lot about that. On the other side is the consumer. When the consumer comes, they're interacting through our technology, primarily through chat today. And when you look at that, about 22 million consumers a month are interacting through LiveEngage. So, what we want to do is really enhance that experience.

And we recently, as a matter of fact, bought a German-based company called Synchronite, which is a co-browsing solution. And what that really is about is about the agent, when they're chatting or they're doing video or they're even doing voice on the platform, can have a shared experience like filling out a form online or putting something into a shopping cart or helping someone with technical support. So, it's a way to really create a hand-in-hand connection between the agent and the consumer. And this will also be applied to mobile.

The shift in mobile is happening. We all know that. We've seen it with advertising platforms, with overall accounting with us, too. A couple of years ago, we've got very focused on it. We bought a company in this space. We've invested heavily in it, and some of the results we're seeing are fantastic. This quarter we grew mobile interactions by 116% quarter-over-quarter.

We had 100% growth in the previous quarter-over-quarter, and we expect to surpass a million mobile interactions by Q4. Q4 of last year, we had very few interactions. So, we'll actually go from almost zero to a million interactions in 12 months.

So, there's a big focus on our side. We think mobile and an engagement with a consumer is at the heart of our strategy, and we'll continue to invest in it.

In October in New York City, we'll have our customer conference called Aspire. It's going to be a great conference. We're going to really show how do you digitally engage the consumer.

And more importantly, we will show LiveEngage and all the new things we're doing. There's a new version that just came out. And we'll sort of take the covers off and show it to the customer base in a way that I think will be really fun and extraordinary. So, I hope many of you who are on the phone will take the opportunity to come here to New York and join us at the conference.

So, with that, we're seeing great, obviously, momentum in the business. Our enterprise business alone, which is really the core of our strategy of growing strategically with our customers, grew at 23%.

So, we're in a very big market segment. We've just started. As I said, the 800 number is our enemy. It's the thing that is basically consuming most of the call centers today. And we want to move that over to us, and the consumers want it.

And so, I think today we are sitting with a platform that we started to develop 2.5 years ago that fits right into what customers want today. We built a team of people over the last 2.5 years that I think can really deliver and execute on those results, and we have a culture and our value of creating meaningful connections that's authentic.

We believe in this, and I believe that's what's going to give us the (inaudible - technical difficulties). Thank you.

(Operator instructions.) We'll pause for just a moment to compile the Q&A roster. Shyam Patil, Wedbush Securities.

Hi, guys. Great quarter. Over the past -- it seems like over the past few quarters, you guys have done a good job of winning larger deals. And just curious kind of going forward how your pipeline looks for the million plus dollar deals, and is that something that you view as being important for the overall growth trajectory? And when you look at the platform, is the platform helping you increase the average deal sizes as you're able to sell it to larger enterprises?

That's a good question. Hey, Shyam, thank you. So, from a deal perspective, we've invested in the sales organization. And our goal have been for them do more strategic selling, and we're seeing some of the benefits of that happen over the last couple of quarters.

We do want our sales guys to go out and look for those larger deals and get those larger opportunities out of the gate. And our customers are willing to sign up for those deals.

From a platform perspective, it absolutely helps, and talking about the direction that we're going from an engagement perspective and digital adoption. So, it definitely helps from the selling perspective.

Great. And in the past you talked about new leadership for the small business segment. How do you think about -- or how should we think about the timing for improvement for the small business group? It seems like the midmarket enterprise group is growing really nicely. The small business group could probably do some improvement. How do you guys just think about the timing for that?

We're very focused on it right now. When we see the business, we see it as really two segments. One is what we call full service or strategic, and that's the plus million dollars. And the rest we call self-service, which was previously small business. So, it's important to the strategy.

Obviously, we just changed the website, and that's important. It's going to be like an e-commerce play for us. Buy marketing, get people to put their credit cards in, get them from a trial to conversion into a full-time client.

So, it's starting. We're just kind of looking at the funnels, looking how the consumers are going through the new website. But, it's starting right now. So, I would say we should expect those coming up. But, like for the -- we just started launching the website and starting to get some information on it. But, it's important to us, very important.

Great. And this is my last question. Rob, you mentioned Comcast not being a customer, if you could just talk about who they are using and just what's been the hurdle there in winning that business. Thank you.

Yes. I mean, obviously it's on our target list, but they're predominately a voice shop today. I don't know what they're using on the digital side, but the majority is still going through voice.

So, obviously we've got a lot of the cable companies today, a lot of the telcos. But, we're focused on.

Great. Thank you.

Thank you.

Richard Baldry, Roth Capital Partners.

Thanks. Congrats on a great quarter. Can you talk a little bit about the sequential growth? It's, I think, the best number I can recall, and it was sharply above what we've seen you do before on a dollar basis. Was there anything unusual in that, anything you feel is more one-time oriented, or do you feel you're sort of breaking your deployment backlog, sort of any breakdown on that just to gauge how sustainable it is as a new growth level?

Yes. So, from a sequential perspective, it was a strong sequential quarter growth. We talked with you a little bit about some of the large deals we did in Q1, and those went live in Q2. So, it had a follow on impact for our Q2.

Overall, our confidence level is shown by us increasing the guidance to $204 million to $207 million, up from $199 million to $204 million. So, we're comfortable with increasing the guidance.

And it was a good quarter, the second quarter. And we look forward to continuing in Q3 and Q4.

And any on the expense side if we look at R&D, G&A? If you look year-over-year, they're pretty flat numbers. So, your allocation into sales and marketing certainly has certainly gone up significantly. Can you talk about how sustainable sort of those levels of spending in R&D and G&A are, how leverageable, if you think they are any sort of maybe currency benefits that are helping that? Thanks.

So, the currency benefits are small. But, from a sustainability perspective, what we expect is G&A to level out if not start to go down over time. We did have some investments to make from an infrastructure perspective.

And then R&D, we've been investing in the platform over the last couple of years. And as we start to roll out the platform, we'll get more feedback. And I would expect R&D to be at the levels that it is today, if not slightly higher.

And then, last one would be, given the success that you saw with large deals, can you talk about how well you think the sales force is ramped now? You did some significant changes there. How do you feel about the productivity there and how much productivity gain do you think is left? And how much of the growth in -- or sales force power increase will come from headcount versus productivity for the rest of the year, maybe into 2015? Thanks.

Yes. There's a lot of productivity I still think we can get into the current sales force. We've started the process of obviously working with our customers with a different conversation, a different offering. So, I think there's a lot of productivity in there. And that's where we're focused on taking the current team we have.

But, they're doing a really great job. We set out on a strategy two years ago and made changes in the sales team and the current leadership. And everyone who's in that team is doing a great job in working with our customers and getting the platform out into the market.

Great. Thanks. Congrats on the great sequential growth.

Thanks a lot.

Thanks, Rich.

Mike Latimore, Northland Capital Markets.

Yes, great quarter as well. I guess the strong sequential growth, is that partly attributable to just improving deployment timelines as well, or have those been relatively constant for a couple quarters now?

Yes. So, Mike, great question. We did have some improvement in our deployment timelines. There was an issue back in early 2013, in the first quarter of 2013, but our team is focused on it. And obviously with the rollout of the LiveEngage platform, our expectation is to reduce as much friction in the deployment as possible.

And what we're seeing on the small business side is a matter of hours or minutes of people being able to deploy a campaign or take that first chat. So, we did have some improvement in our deployment timelines.

And can you give just an update on LiveEngage 2.0 for your enterprise market? What's the timeline there for getting it more widely penetrated in your current customer base, let's say?

Yes. We're looking at towards the end of the year. After the Aspire Conference is really where we're going to show them.

But, we obviously were out showing them the platform there using the older platform of LiveEngage. But, we're out there showing it to them. They're excited. And then, at Aspire is when we'll really showcase some of the stuff we're doing on the enterprise side.

So, you're landing obviously big deals before this next version comes out. I mean, do the customers ask about how to convert over to the next version? And kind of what's your comment around that?

Yes. As I've said in the past, it's not hard to convert. Matter of fact, some pieces you can use. It's more like an upgrade into the next version of the platform. And so, some people are going to start using the reporting system that's in there. Some are going to use the agent console.

So, the way we designed this is so that we wouldn't have these hard cutoffs. But, there are some features that are in it that they want. They can move over when they want to move over.

It doesn't -- as you can see in the numbers, it doesn't reduce our ability to obviously sell. And we're selling use cases, increasing sales, decreasing costs. We can do it with each platform. So, when they're ready, we'll move them. But, obviously they have a reason to move because it's got a lot more in it.

Yes. And then, the consumer business, it's kind of the first real uptick in a while. Can you just give a little bit more detail around that?

Yes. They're -- we are focused on some other categories, especially in the education and tutoring side. They've done a very good job with that business and it's just starting to expand. There's some great mobile plays going on over there. So, they've got a mobile play that they're getting some very good traction in.

So, we're really happy with that. And it's seven years ago we bought them, that company originally. But, they've done a very good job recently. And the people running it are doing a great job in bringing it to the next level.

Great. Thanks a lot. Good luck.

Thanks a lot.

Thank you for joining today's conference call. You may now disconnect. Your final question today will come from Craig Nankervis with First Analysis. Please go ahead with your question.

Thanks. I'm glad we're still here. Nice job on the quarter.

Thanks a lot, Craig.

We don't want to lose you, Craig.

Right. Right. I wonder if you could -- a little bit on your pipeline, a couple questions. The larger opportunities that you're working and that you're, I guess, gravitating towards, can you give a flavor for the mix of those large deals? Is it more new customers, or is it mainly existing customers that are wanting to expand in some meaningful way, I guess presumably to go from voice? Maybe let's start with that one first.

Yes. Sure. From the deal perspective, there are actually a mix of deals. There are some larger customers coming in that are signing up for big deals out of the gate.

One of those was one of the larger insurance companies in North America, which is brand-new to us, and signed a multiyear deal. And one of them was a customer that we've had for a period of time that really wanted to drive towards additional digital adoption and were getting pushed by their customers.

So, it's a mix of deals, Craig. It's not one or the other. And we're continuing to push that pipeline.

And so, the large insurance company that's a new customer, they were -- I presume that they were sort of minimally involved in chat previously and that they have just gone ahead and made a significant commitment to chat out of the gate because what, they've just seen enough or they've had enough pain for voice? Could you maybe give a couple sentences on why they might have done a big deal out of the gate?

Yes. So, it's an insurance company, and like I said one of the larger ones in North America. They did not have another chat offering on their site, and they're making a bigger push from a digital perspective than they have in the past. And it's a part of their strategy over the next five to seven years. And so, what they were doing is putting in the building blocks to help them continue to innovate in the space and connect and engage with customers.

Okay. So, to the extent you bring across more large deals over the finish line in the second half, it's going to be a mix of new and existing customers is what it would sound like.

Yes, that's correct. That's what I would expect.

And then, also on the pipeline, how many are evaluating the social chat opportunity? Can you give a flavor for that?

Yes. I don't know the percentages. But, a lot of them obviously, especially on the enterprise side, are looking at the integration. Some of our big banks are already doing the integration. So, with looking -- they can re-Tweet and Facebook or -- obviously in Twitter or Facebook.

But, I don't know the percentages. But they are obviously, if they're large, already doing it, and they want to put chat into that.

So, the social chat opportunity, I mean, it's percolating more than modestly is what you would say.

Yes. And I think a lot of it has to do with it if the social platforms are successful. Obviously Twitter had a good quarter, and they're getting a lot of interaction. And a lot of it -- we're going to see customer conversations in there. They're going to want to be in those conversations. And so, as those platforms evolve as customer -- as a channel for customer communication, we have the way to integrate into it.

We have like a native app. We have an app that snaps right into Facebook so that in the page of the brand they can have chat in there like a native app. It's a very cool implementation. We have -- I think there's about 1,200, over 1,000 implementations of that right now that's in the market. I don't know on the Twitter side, on the monitoring side. But, on the Facebook side, I think it there's about 1,200 implementations of that our customer base.

Okay. And then just lastly, on the mobile chat front, the adoption that you noted and that you're expecting by year end, just a flavor for that one too on the mix. Is that new customers going forward, or is it mainly existing customers? I'm curious about that as well.

It's both, but we're obviously focused on that case in the existing base and moving them. We're also -- there's two flavors of that. One is when somebody arrives at the website with a mobile device, it's enabled to do chat through a Web-based interaction on mobile.

But, then we also have implementations where we're natively in the application. So, the launch brands were natively in the application. So, they use our APIs. They've put it into the application. So, if you're on those applications, you can instantly do an interaction through LivePerson.

Right. Right. Okay, that's what I had. I appreciate the help. Thank you.

Thank you.

Your final question is from Brian Schwartz with Live Person [sic - see analyst coverage, Oppenheimer & Co.] Go ahead with your question.

Yes. Hi. Thanks for taking my questions. I too will add my congratulations on a great quarter.

Thanks, Brian.

Thanks, Brian.

Rob or Dan, I was wondering if you guys can comment on the geographic booking strength in the quarter, how it played out between international and North America.

Yes. So, it was well-balanced. I mean, obviously most of our business is in North America. And so, the alignment of the bookings aligned with how the revenue was allocated. But, still strong bookings coming from North America, and the EMEA team doing very well as well.

Okay. Thank you for that color. And then, one follow up on the consumer business. I think it was a question earlier. There was a big step up here. Just wondering if you stepped up marketing spend at all in the segment or if that growth just mostly just came organically from what the business was doing?

Yes, we've stepped up marketing a little bit in that area. It's more of being efficient in how we're focusing the spend.

And obviously, the education and tutoring, which is a huge -- obviously education and tutoring is growing considerably online, and we're doing well in that category. And the person who runs that group, about a year ago, over a year ago, wanted to really focus on that. And it takes time to build it, but we're seeing some of the fruits of that.

And also, as I mentioned, there's a big mobile play there. We do have a mobile implementation, a Web-based implementation. We are going to start releasing a mobile app for Android and iOS, and it plays into our strategy. It's about interacting between an expert and a consumer. In this case, obviously the business model is different than the LiveEngage one, but we're excited about the education and tutoring vertical right now.

Thanks, Rob, for the additional color. And then, just a last question that I had for Dan, just on the year guidance, actually on the raise of the guidance, just wondering how much revenue should we attribute to Synchronite in terms of that guidance raise? And I guess said another way, how much of the guidance raise is just pure organic from business momentum and how much should we think about adding for Synchronite this year? Thanks.

So, almost nothing for Synchronite, most of the raise was all due to organic. Synchronite was a small company based in Germany. It was an acquisition that was less than $5 million, primarily people and software. And our goal is to integrate it into the LiveEngage platform over the next six months. But, as a standalone revenue stream, it's small.

Thanks, Dan. That's helpful. It sounds like a technology acquisition for you guys. I appreciate the help.

Pure technology.

Terrific. Thank you.

Thank you, everyone, for joining our call. And we will see you on the Q3 2014 call. Thank you.

Thanks, everybody.

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