lvox-20230930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from _______ to _______

Commission file number 001-38825

LIVEVOX HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware			82-3447941
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

655 Montgomery Street, Suite 1000, San Francisco, CA 94111

(Address of principal executive offices) (Zip Code)

(415) 671-6000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

LVOX

The Nasdaq Stock Market LLC

Redeemable Warrants, each whole Warrant exercisable to purchase one share of Class A common stock at an exercise price of $11.50

LVOXW

The Nasdaq Stock Market LLC

Units, each consisting of one share of Class A common stock and one-half of one redeemable Warrant

LVOXU

The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-Accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒

As of November 3, 2023, the registrant had 94,635,594 shares of Class A common stock, par value $0.0001 per share, issued and outstanding (102,179,344 shares of common stock, less 7,543,750 shares held in escrow).

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TABLE OF CONTENTS


			Page
Part I - Financial Information			1
Item 1. Consolidated Financial Statements			1
Consolidated Balance Sheets			1
Consolidated Statements of Operations and Comprehensive Loss			3
Consolidated Statements of Stockholders’ Equity			4
Consolidated Statements of Cash Flows			6
Notes to the Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			41
Item 3. Quantitative and Qualitative Disclosure About Market Risk			57
Item 4. Controls and Procedures			58

Part II - Other Information			59
Item 1. Legal Proceedings			59
Item 1A. Risk Factors			59
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			61
Item 3. Defaults Upon Senior Securities			61
Item 4. Mine Safety Disclosures			61
Item 5. Other Information			61
Item 6. Exhibits			61

Signatures			63

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of present or historical fact included in this Quarterly Report, regarding the future financial performance of LiveVox Holdings, Inc. (“LiveVox” or the “Company”), as well as LiveVox’s strategy, future operations, future operating results, financial position, expectations regarding revenue, losses and costs, prospects, plans and objectives of management are forward-looking statements. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report are subject to risks and uncertainties that may include, for example:

•the proposed acquisition of the Company pursuant to the NICE Merger Agreement (as defined below);

•our expectations regarding the timing and completion of the NICE Merger (as defined below);

•the business, operations and financial performance of the Company, including market conditions and global and economic factors beyond the Company’s control, such as a tight labor market, inflationary pressures, rising interest rates, volatility in foreign exchange rates, supply chain constraints, recessionary fears, and global impacts from armed conflicts, including the ongoing war between Ukraine and Russia and conflicts in the Middle East as well as governmental sanctions imposed in response;

•the high level of competition in the cloud contact center industry and the intense competition and competitive pressures from other companies in the industry in which the Company operates;

•the effect of legal, tax and regulatory changes;

•the Company's reliance on third-party telecommunications and internet service providers and aggregators to provide its products and for other aspects of its business;

•the Company’s ability to complete the NICE Merger, raise financing or complete acquisitions in the future;

•the Company’s success in retaining or recruiting, or changes required in, its officers, key employees or directors;

•the future financial performance of the Company;

•the outcome of any legal proceedings that may be instituted against the Company;

•reliance on information systems and the ability to properly maintain the confidentiality and integrity of data;

•the occurrence of cyber incidents or a deficiency in cybersecurity protocols;

•the Company’s ability to maintain its listing on The Nasdaq Stock Market LLC (“Nasdaq”), including its ability to comply with the requirement that the bid price for the Class A common stock be above $1.00 for a period of 30 consecutive trading days; and

•the ability to obtain third-party software licenses for use in or with the Company’s products.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other risk factors included elsewhere in this Quarterly Report and those described in our other filings with the SEC, including our Annual Report on Form 10-K filed with the SEC on March 2, 2023. Forward-looking statements reflect current views about LiveVox’s plans, strategies and prospects, including the risks, uncertainties and other factors relating to our proposed acquisition pursuant to the NICE Merger, which are based on information available as of the date of this Quarterly Report. Except to the extent required by applicable law, LiveVox undertakes no obligation (and expressly disclaims any such obligation) to update or revise the forward-looking statements whether as a result of new information, future events or otherwise.

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PART I—FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

LIVEVOX HOLDINGS, INC.

Consolidated Balance Sheets

(In thousands, except per share data)


	As of
	September 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	13,208	$	20,742

Marketable securities—available for sale debt securities, current (amortized cost of $44,914 and $49,593 as of September 30, 2023 and December 31, 2022, respectively)	44,192		48,182
Accounts receivable, net of allowance of credit losses of $2,487 and $1,459 as of September 30, 2023 and December 31, 2022, respectively	23,807		21,447
Deferred sales commissions, current	3,531		3,171
Prepaid expenses and other current assets	6,925		5,211
Total current assets	91,663		98,753
Property and equipment, net	1,927		2,618
Goodwill	47,481		47,481
Intangible assets, net	14,254		16,655
Operating lease right-of-use assets	3,237		4,920
Deposits and other	406		371

Deferred sales commissions, net of current	7,676		7,356
Deferred tax asset, net	20		1

Total assets	$	166,664	$	178,155

LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,602	$	5,987
Accrued expenses	12,180		12,399
Deferred revenue, current	1,303		1,318
Term loan, current	1,823		982
Operating lease liabilities, current	1,207		1,655
Finance lease liabilities, current	—		11
Total current liabilities	22,115		22,352


Deferred revenue, net of current	450		338
Term loan, net of current	52,166		53,585
Operating lease liabilities, net of current	2,909		3,649


Warrant liability	500		633
Other long-term liabilities	361		363
Total liabilities	78,501		80,920

Commitments and contingencies (Note 9 and 21)
Stockholders’ equity:
Preferred stock, $0.0001 par value per share; 25,000 shares authorized and none issued and outstanding as of September 30, 2023 and December 31, 2022.	—		—

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Common stock, $0.0001 par value per share; 500,000 shares authorized and 94,469 shares issued and outstanding as of September 30, 2023; 500,000 shares authorized and 92,729 shares issued and outstanding as of December 31, 2022.	9		9
Additional paid-in capital	273,519		264,919
Accumulated other comprehensive loss	(1,263)		(2,196)
Accumulated deficit	(184,102)		(165,497)
Total stockholders’ equity	88,163		97,235
Total liabilities & stockholders’ equity	$	166,664	$	178,155

The accompanying notes are an integral part of these consolidated financial statements.

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LIVEVOX HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited) (In thousands, except per share data)


	For the three months ended September 30,				For the nine months ended September 30,
	2023		2022		2023		2022
Revenue	$	35,352	$	35,253	$	107,593	$	100,333
Cost of revenue	11,274		12,893		35,676		39,073
Gross profit	24,078		22,360		71,917		61,260
Operating expenses
Sales and marketing expense	10,988		13,759		35,761		42,795
General and administrative expense	10,057		7,255		28,621		22,855
Research and development expense	7,340		7,553		22,182		24,210
Total operating expenses	28,385		28,567		86,564		89,860
Loss from operations	(4,307)		(6,207)		(14,647)		(28,600)
Interest expense, net	1,036		896		3,458		2,390
Change in the fair value of warrant liability	50		350		(133)		(134)
Other expense, net	407		160		295		209
Total other expense, net	1,493		1,406		3,620		2,465
Pre-tax loss	(5,800)		(7,613)		(18,267)		(31,065)
Provision for (benefit from) income taxes	(53)		159		338		474
Net loss	$	(5,747)	$	(7,772)	$	(18,605)	$	(31,539)
Comprehensive loss
Net loss	$	(5,747)	$	(7,772)	$	(18,605)	$	(31,539)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment	38		(159)		244		(361)
Net unrealized gain (loss) on marketable securities	103		(316)		689		(1,492)

Total other comprehensive income (loss), net of tax	141		(475)		933		(1,853)
Comprehensive loss	$	(5,606)	$	(8,247)	$	(17,672)	$	(33,392)
Net loss per share
Net loss per share—basic and diluted	$	(0.06)	$	(0.08)	$	(0.20)	$	(0.34)


Weighted average shares outstanding—basic and diluted	94,372		92,351		93,598		91,800

The accompanying notes are an integral part of these consolidated financial statements.

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LIVEVOX HOLDINGS, INC.

Consolidated Statements of Stockholders’ Equity

(Unaudited) (In thousands)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance at December 31, 2021	90,697	$	9	$	253,468	$	(477)	$	(128,022)	$	124,978


Foreign currency translation adjustment	—	—		—		(49)		—		(49)
Net unrealized loss on marketable securities	—	—		—		(888)		—		(888)

Stock-based compensation	—	—		2,479		—		—		2,479
Net loss	—	—		—		—		(12,987)		(12,987)
Balance at March 31, 2022	90,697	$	9	$	255,947	$	(1,414)	$	(141,009)	$	113,533
Gross issuance of shares upon vesting of stock-based awards	1,055	—		—		—		—		—
Shares withheld to cover employees’ withholding taxes for stock-based awards	(205)	—		(317)		—		—		(317)
Foreign currency translation adjustment	—	—		—		(153)		—		(153)
Net unrealized loss on marketable securities	—	—		—		(288)		—		(288)

Stock-based compensation	—	—		3,423		—		—		3,423
Net loss	—	—		—		—		(10,780)		(10,780)
Balance at June 30, 2022	91,547	$	9	$	259,053	$	(1,855)	$	(151,789)	$	105,418
Finders Agreement Shares	781	—		—		—		—		—
Gross issuance of shares upon vesting of stock-based awards	259	—		—		—		—		—
Shares withheld to cover employees’ withholding taxes for stock-based awards	(81)	—		(208)		—		—		(208)
Foreign currency translation adjustment	—	—		—		(159)		—		(159)
Net unrealized loss on marketable securities	—	—		—		(316)		—		(316)

Stock-based compensation	—	—		2,976		—		—		2,976
Net loss	—	—		—		—		(7,772)		(7,772)
Balance at September 30, 2022	92,506	$	9	$	261,821	$	(2,330)	$	(159,561)	$	99,939

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	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance at December 31, 2022	92,729	$	9	$	264,919	$	(2,196)	$	(165,497)	$	97,235
Gross issuance of shares upon vesting of stock-based awards	316	—		—		—		—		—
Shares withheld to cover employees’ withholding taxes for stock-based awards	(108)	—		(294)		—		—		(294)
Net transfer from LiveVox TopCo	—	—		219		—		—		219
Foreign currency translation adjustment	—	—		—		66		—		66
Net unrealized gain on marketable securities	—	—		—		427		—		427


Stock-based compensation	—	—		2,649		—		—		2,649
Net loss	—	—		—		—		(8,469)		(8,469)
Balance at March 31, 2023	92,937	$	9	$	267,493	$	(1,703)	$	(173,966)	$	91,833
Gross issuance of shares upon vesting of stock-based awards	1,570	—		—		—		—		—
Shares withheld to cover employees’ withholding taxes for stock-based awards	(305)	—		(835)		—		—		(835)
Net transfer from LiveVox TopCo	—	—		18		—		—		18
Foreign currency translation adjustment	—	—		—		140		—		140
Net unrealized gain on marketable securities	—	—		—		159		—		159


Stock-based compensation	—	—		3,242		—		—		3,242
Net loss	—	—		—		—		(4,389)		(4,389)
Balance at June 30, 2023	94,202	$	9	$	269,918	$	(1,404)	$	(178,355)	$	90,168
Gross issuance of shares upon vesting of stock-based awards	385	—		—		—		—		—
Shares withheld to cover employees’ withholding taxes for stock-based awards	(118)	—		(379)		—		—		(379)
Foreign currency translation adjustment	—	—		—		38		—		38
Net unrealized gain on marketable securities	—	—		—		103		—		103


Stock-based compensation	—	—		3,980		—		—		3,980
Net loss	—	—		—		—		(5,747)		(5,747)
Balance at September 30, 2023	94,469	$	9	$	273,519	$	(1,263)	$	(184,102)	$	88,163

The accompanying notes are an integral part of these consolidated financial statements.

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LIVEVOX HOLDINGS, INC.

Consolidated Statements of Cash Flows

(Unaudited) (Dollars in thousands)


	For the nine months ended September 30,
	2023		2022
Operating activities:
Net loss	$	(18,605)	$	(31,539)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	706		873
Amortization of identified intangible assets	2,401		2,677
Amortization of deferred debt issuance costs	143		81
Amortization of deferred sales commissions	2,702		2,312
Non-cash lease expense	986		1,369
Stock-based compensation expense	9,871		8,878

Credit loss expense	1,060		373
Loss on disposition or impairment of asset	773		13
Deferred income tax benefit	(19)		(133)


Net realized loss on sale of marketable securities	83		42
Amortization of premium paid on marketable securities	54		346
Change in the fair value of the warrant liability	(133)		(134)

Changes in assets and liabilities
Accounts receivable	(3,420)		(498)
Other assets	(1,749)		1,249
Deferred sales commissions	(3,381)		(3,340)
Accounts payable	(386)		(2,369)
Accrued expenses	222		(1,945)
Deferred revenue	97		(71)
Operating lease liabilities	(1,189)		(1,467)

Net cash used in operating activities	(9,784)		(23,283)
Investing activities:
Purchases of property and equipment	(69)		(880)
Purchases of marketable securities	(19,802)		(9,459)
Proceeds from sale of marketable securities	11,588		3,451
Proceeds from maturities and principal paydowns of marketable securities	12,755		5,961


Net cash provided by (used in) investing activities	4,472		(927)
Financing activities:


Repayments on loan payable	(421)		(421)
Proceeds from drawdown on line of credit	320		—
Repayments of drawdown on line of credit	(320)		—
Payments of debt issuance costs	(299)		—

Repayments on finance lease obligations	(11)		(19)
Payments of employees’ withholding taxes on net share settlement of stock-based awards	(1,509)		(513)
Proceeds from the structured payable arrangement	—		1,311
Principal payments under the structured payable arrangement	(441)		(435)
Net transfer from LiveVox TopCo	237		—
Net cash used in financing activities	(2,444)		(77)
Effect of foreign currency translation	222		(336)
Net decrease in cash, cash equivalents and restricted cash	(7,534)		(24,623)

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Cash, cash equivalents, and restricted cash beginning of period	20,742		47,317
Cash, cash equivalents, and restricted cash end of period	$	13,208	$	22,694


	For the nine months ended September 30,
	2023		2022
Supplemental disclosure of cash flow information:
Interest paid	$	4,130	$	2,619
Income taxes paid	1,005		345
Supplemental schedule of non-cash investing activities:
Net unrealized loss (gain) on marketable securities	$	(689)	$	1,492

Additional right-of-use assets	—		1,261

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets (dollars in thousands):


	As of September 30,
	2023		2022
Cash and cash equivalents	$	13,208	$	22,594
Restricted cash, current	—		100

Total cash, cash equivalents and restricted cash	$	13,208	$	22,694

The accompanying notes are an integral part of these consolidated financial statements.

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

1. Organization

LiveVox Holdings, Inc. (formerly known as Crescent Acquisition Corp (“Crescent”)), and its subsidiaries (collectively, the “Company,” “LiveVox,” “we,” “us” or “our”) is engaged in the business of developing and marketing a cloud-hosted Contact Center as a Service (“CCaaS”) customer engagement platform that leverages microservice technology to rapidly innovate and scale digital engagement functionality that also incorporates the capabilities of fully integrated omnichannel customer connectivity, multichannel enabled Customer Relationship Management and Workforce Optimization applications. LiveVox’s customers are located primarily in the United States. LiveVox’s services are used to initiate and manage customer contact campaigns primarily for companies in the accounts receivable management, tele-sales and customer care industries.

On June 18, 2021 (the “Closing Date” or “Closing”), Crescent, a special purpose acquisition company (“SPAC”) incorporated in Delaware, consummated the business combination pursuant to an Agreement and Plan of Merger, dated January 13, 2021 (the “SPAC Merger Agreement”), by and among Crescent, Function Acquisition I Corp, a Delaware corporation and direct, wholly owned subsidiary of Crescent (“First Merger Sub”), Function Acquisition II LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of Crescent (“Second Merger Sub”), LiveVox Holdings, Inc., a Delaware corporation (“Old LiveVox”), and GGC Services Holdco, Inc., a Delaware corporation, solely in its capacity as the representative, agent and attorney-in-fact (in such capacity, the “Stockholder Representative”) of LiveVox TopCo, LLC (“LiveVox TopCo”), a Delaware limited liability company and the sole stockholder of Old LiveVox as of immediately prior to Closing (the “LiveVox Stockholder”). Pursuant to the SPAC Merger Agreement, a business combination between Crescent and Old LiveVox was effected through (a) the merger of First Merger Sub with and into Old LiveVox, with Old LiveVox continuing as the surviving corporation (the “First Merger”) and (b) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Old LiveVox with and into Second Merger Sub, with Second Merger Sub continuing as the surviving entity (the “Second Merger”, and collectively with the other transactions described in the SPAC Merger Agreement, the “SPAC Merger”). On the Closing Date, Crescent changed its name to “LiveVox Holdings, Inc.” and Second Merger Sub changed its name to “LiveVox Intermediate LLC”.

On June 22, 2021, the Company’s ticker symbols on The Nasdaq Stock Market LLC (“Nasdaq”) for its Class A common stock, warrants to purchase Class A common stock and public units were changed to “LVOX”, “LVOXW” and “LVOXU”, respectively.

LiveVox, Inc. was a direct, wholly owned subsidiary of Old LiveVox prior to the SPAC Merger and is a wholly owned subsidiary of the Company after the SPAC Merger. LiveVox, Inc. was first incorporated in Delaware in 1998 under the name “Tools for Health” and in 2005 changed its name to “LiveVox, Inc.” On March 21, 2014, LiveVox, Inc. and its subsidiaries were acquired by Old LiveVox. The principal United States operations of the Company are located in San Francisco, California. The Company has five main operating subsidiaries: LiveVox, Inc., which is wholly owned and incorporated in Delaware, LiveVox Colombia SAS which is wholly owned with an office located in Medellin, Colombia, LiveVox Solutions Private Ltd with an office located in Bangalore, India, Speech IQ, LLC which is wholly owned and organized in Ohio, and Engage Holdings, LLC (d/b/a BusinessPhone.com) (“BusinessPhone.com”) which is wholly owned and organized in Ohio. Additionally, the Company has a wholly owned subsidiary, LiveVox International, Inc., that is incorporated in Delaware. LiveVox, Inc. and LiveVox International, Inc. own 99.99% and 0.01%, respectively, of LiveVox Solutions Private Ltd.

2. Summary of Significant Accounting Policies

a) Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations or if they substantially duplicate the disclosures contained in the Company’s annual audited consolidated financial statements. Therefore, these unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the SEC on March 2, 2023. The information as of December 31, 2022 included in the consolidated balance sheets was derived from those audited consolidated financial statements.

In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. All intercompany transactions and balances have been

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

eliminated in consolidation. Results of operations for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results to be expected for the full annual periods.

Certain prior period amounts have been reclassified to conform to current period presentation. The reclassifications had no impact on the Company’s net income, financial position, stockholders’ equity or cash flows as previously reported.

b) Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates, and such differences could be material to the Company’s consolidated financial position and results of operations, requiring adjustment to these balances in future periods. Significant items subject to such estimates and assumptions include, but are not limited to, the determination of the useful lives of long-lived assets, period of benefit of deferred sales commissions, allowances for credit losses, fair value of marketable securities, fair value of goodwill and long-lived assets, fair value of incentive awards, fair value of warrants, establishing standalone selling price, valuation of deferred tax assets, income tax uncertainties and other contingencies, including the Company’s ability to exercise its right to repurchase incentive options from terminated employees.

c) Segment Information

The Company has determined that its Chief Executive Officer (“CEO”) is its chief operating decision maker. The Company’s CEO reviews financial information presented on a consolidated basis for purposes of assessing performance and making decisions on how to allocate resources. Accordingly, the Company has determined that it operates in a single reportable segment.

d) Foreign Currency Translation

The financial position and results of operations of the Company’s international subsidiaries are measured using the local currency as the functional currency. Revenue and expenses have been translated into U.S. dollars at average exchange rates prevailing during the periods presented. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of stockholders’ equity (accumulated other comprehensive loss), unless there is a sale or complete liquidation of the underlying foreign investments, or the adjustment is inconsequential.

e) Fair Value of Financial Instruments

Fair value is defined as the price that would be received from the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date. The Company utilizes a fair value hierarchy to classify fair value amounts of the Company’s assets and liabilities recognized or disclosed in the Company’s consolidated financial statements based on the lowest level of input that is significant to the fair value measurement. The levels of the hierarchy are described below:

•Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2—Includes other inputs that are directly or indirectly observable in the marketplace.

•Level 3—Unobservable inputs that are supported by little or no market activity.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions based on the best information available. The Company recognizes transfers into and out of the levels as of the end of each reporting period. Refer to Note 19 for additional information regarding the fair value measurements.

f) Liquidity and Capital Resources

LiveVox’s consolidated financial statements have been prepared assuming the Company will continue as a going concern for the 12-month period from the date of issuance of the consolidated financial statements, which contemplates the realization of assets

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

and the settlement of liabilities and commitments in the normal course of business. The Company’s main sources of liquidity include:

•Available-for-sale (“AFS”) debt securities, which are all classified as short-term securities to fund current operations and may be liquidated at the Company’s discretion if the need arises. The Company held AFS debt securities of $44.2 million and $48.2 million as of September 30, 2023 and December 31, 2022, respectively. See Note 4 for more information;

•The term loan and revolving credit facility that the Company entered into with PNC Bank on November 7, 2016 (as amended, the “Credit Facility”), which has been amended several times, most recently as of May 31, 2023. As of September 30, 2023, the term loan commitment was $54.5 million, the revolver commitment was $5.0 million and the letter of credit sublimit was $1.5 million. See Notes 9 and 10 for more information.

The Company’s primary use of cash is for operating and administrative activities including employee-related expenses, and general, operating and overhead expenses. Future capital requirements will depend on many factors, including the Company’s customer growth rate, customer retention, timing and extent of development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced services offerings, the continuing market acceptance of the Company’s services, effective integration of acquisition activities, if any, and maintaining the Company’s bank credit facility. Additionally, the duration and extent of the impact from the current macroeconomic and geopolitical conditions continues to depend on future developments that cannot be accurately predicted at this time, such as a tight labor market, inflationary pressures, rising interest rates, volatility in foreign exchange rates, supply chain constraints, recessionary fears and the specific impact of these and other factors on LiveVox’s business, employees, customers and partners. While those factors have caused operational difficulties, and may continue to create challenges for the Company’s performance, they have not, thus far, had a substantial net impact on the Company’s liquidity position.

The Company believes it has sufficient financial resources for at least the next 12 months from the date these consolidated financial statements are issued.

g) Debt Discount and Issuance Costs

The Company’s debt issuance costs and debt discount are recorded as a direct reduction of the carrying amount of the debt liability and are amortized to interest expense over the contractual term of the term loan.

h) Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents are stated at fair value. The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents. The Company limits its credit risk associated with the cash and cash equivalents by placing investments with banks it believes are highly creditworthy. The Company has exposure to credit risk to the extent cash balances exceed amounts covered by Federal deposit insurance. At September 30, 2023 and December 31, 2022, the Company had no restricted cash. Cash and cash equivalents consist of bank deposits and money market funds.

i) Marketable Securities

The Company invests in various marketable securities. As of September 30, 2023 and December 31, 2022, the Company designated all of these marketable securities as debt securities and classified them as available-for-sale (“AFS”). No debt securities were classified as held-to-maturity (“HTM”) or trading. Debt securities are classified as current or non-current, based on maturities and the Company’s expectations of sales and redemptions in the next 12 months. The Company determines the appropriate classification of marketable securities at the time of purchase and re-evaluates such designation as of each balance sheet date.

Debt securities classified as AFS are reported at fair value with unrealized gains and losses, net of income taxes, as a separate component of stockholders’ equity (accumulated other comprehensive loss) in the consolidated balance sheets until the securities are sold or the unrealized losses are related to credit losses. Gains and losses on sales of AFS debt securities are recorded on the trade date in other income (expense), net, in the consolidated statements of operations and comprehensive loss. The cost of AFS debt securities sold or the amount reclassified out of accumulated other comprehensive loss into earnings is determined using the specific identification method.

At each reporting date, the Company evaluates the amortized cost of AFS debt securities compared to their fair value to determine whether an AFS debt security is impaired. The Company first assesses whether it intends to sell the security or whether it is more

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

likely than not that the Company will be required to sell the security before the recovery of its entire amortized cost basis. If either of these criteria is met, the security’s amortized cost basis is written down to fair value through other income (expense), net, in the consolidated statements of operations and comprehensive loss. If neither of these criteria is met, the Company evaluates whether the decline in fair value below amortized cost basis has resulted from credit losses or other factors. In making this assessment, the Company considers factors such as the extent to which fair value is less than amortized cost basis, any changes to the rating of the security by a rating agency, and any adverse conditions specifically related to the security. Credit related unrealized losses are recognized as an allowance for credit losses in the consolidated balance sheets with a corresponding charge in other income (expense), net, in the consolidated statements of operations and comprehensive loss. Non-credit related unrealized losses are recorded in other comprehensive income (loss), as applicable, net of applicable taxes.

On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and all subsequent updates (collectively, the “ASC 326”) and applied to its AFS debt securities. Please refer to Note 2(aa) for more information about ASC 326. See Note 4 for additional information relating to the Company’s marketable securities.

In connection with the adoption of new standards, the Company elected to exclude accrued interest from both the fair value and the amortized cost basis of AFS debt securities and present it within prepaid expenses and other current assets in the Company’s consolidated balance sheets. The Company elected not to measure an allowance for credit losses for accrued interest receivable. As such, accrued interest receivable is written off in a timely manner when deemed uncollectible, by reversing previously recognized interest income.

j) Accounts Receivable

Trade accounts receivable are stated net of any write-offs and the allowance for credit losses, at the amount the Company expects to collect. The Company performs ongoing credit evaluations of its customers and generally does not require collateral unless a customer has previously defaulted. The Company maintains an allowance for credit losses, which represents the best estimate of lifetime expected credit losses against the existing accounts receivable, inclusive of unbilled receivables, based on certain factors including the age of the receivable balance, historical write-off experience, past collection experience with the customer, credit quality of the customer, current economic conditions, and reasonable and supportable forecasts of future economic conditions. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Accounts receivable are charged off against the allowance for credit losses after all means of collection have been exhausted and the potential for recovery is considered remote. Recoveries of accounts receivable previously written off are recorded as income when received.

The allowance for credit losses activities for the three and nine months ended September 30, 2023 and 2022 are as follows (dollars in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Balance, beginning of period	$	2,362	$	1,454	$	1,459	$	1,282
Credit loss expense	153		(29)		1,060		373
Accounts receivable write-offs	(28)		(131)		(32)		(534)
Accounts receivable recoveries	—		35		—		208
Balance, end of period	$	2,487	$	1,329	$	2,487	$	1,329

On January 1, 2023, the Company applied ASC 326 to its trade accounts receivable. The Company determined that the allowance for credit losses as of December 31, 2022 recorded under the accounting standards in effect during that period is sufficient and that no additional allowance for credit losses on its trade accounts receivable is required upon adoption of ASC 326. Please refer to Note 2(aa) for more information about ASC 326.

k) Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs, including planned major maintenance activities, are charged to expense as incurred. When assets are retired or disposed, the asset’s original cost and

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

related accumulated depreciation are eliminated from the accounts and any gain or loss is reflected in the consolidated statements of operations and comprehensive loss. Amortization expense on capitalized software is included in depreciation expense. Depreciation of leasehold improvements is recorded over the shorter of the estimated useful life of the leasehold improvement or lease terms that are reasonably assured.

Depreciation of property and equipment is provided using the straight-line method based on the following estimated useful lives:


			Years
Computer equipment			3 - 5
Computer software			3
Furniture and fixtures			5 - 10
Leasehold improvements			5
Website development			2

l) Identified Intangible Assets

On March 21, 2014, LiveVox, Inc. and subsidiaries were acquired by LiveVox Holdings, Inc. On October 16, 2019, the Company acquired the rights to certain assets of Teckst Inc. On December 16, 2019, the Company acquired the rights to Speech IQ, LLC. On February 5, 2021, the Company completed its asset acquisition of BusinessPhone. The acquisitions resulted in identified marketing-based, technology-based, customer-based, trademark-based, and workforce-based intangible assets. The fair value of the identified assets was determined as of the date of the acquisition by management with the assistance of an independent valuation firm. The identified intangible assets are being amortized using the straight-line method based on the following estimated useful lives:


			Years
Marketing-based			7
Technology-based			4 - 10
Customer-based			7 - 16
Trademark-based			4
Workforce-based			10

m) Goodwill

Goodwill represents the excess of the purchase price of acquired business over the fair value of the underlying net tangible and intangible assets. The Company performs its annual impairment review of goodwill on October 1 of each year, and when a triggering event occurs between annual impairment tests.

In testing for goodwill impairment, the Company has the option to first assess qualitative factors to determine if it is more likely than not that the fair value of the Company’s single reporting unit is less than its carrying amount, including goodwill, or bypass the qualitative assessment and proceed directly to the quantitative impairment test in accordance with Accounting Standards Codification (“ASC”) 350-20-35, as amended by ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, to determine if the fair value of the reporting unit exceeds its carrying amount. If the fair value is determined to be less than the carrying value, an impairment charge is recorded for the amount by which the reporting unit’s carrying amount exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit.

During the three and nine months ended September 30, 2023 and 2022, no triggering events have occurred that would require an impairment review of goodwill outside of the required annual impairment review, and therefore, no impairment charges were recorded during those periods. Refer to Note 6 for more information.

n) Impairment of Long-Lived Assets

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset and long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value. In 2023, the Company announced the closure of certain underutilized physical offices within the United States as more of the Company’s employees shift to a hybrid or remote work environment. During the three and nine months ended September 30,

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

2023, the Company recognized an impairment charge of $0.2 million and $0.7 million, respectively, to reflect the write-down of the carrying amount excess over the fair value of the right-of-use asset for the offices closed. No impairment losses were recognized during the three and nine months ended September 30, 2022.

o) Amounts Due to Related Parties

In the ordinary course of business, the Company has and expects to continue to have transactions with its stockholders and affiliates. Refer to Note 11 for more information.

p) Concentration of Risk

Concentration of Credit and Customer Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities and accounts receivable. Risks associated with cash and cash equivalents and marketable securities are mitigated using what the Company considers creditworthy institutions. The Company performs ongoing credit evaluations of its customers’ financial condition. Substantially all of the Company’s assets are in the United States.

As of September 30, 2023 and December 31, 2022, no single issuer represented more than 10% of the Company’s marketable securities.

The Company’s customers are primarily in the receivables management, tele-sales and customer care industries. During the three and nine months ended September 30, 2023 and 2022, substantially all the Company’s revenue was generated in the United States. For the three and nine months ended September 30, 2023 and 2022, no single customer represented more than 10% of the Company’s revenue. As of September 30, 2023 and December 31, 2022, no single customer represented more than 10% of the Company’s accounts receivable.

Concentration of Supplier Risk

The Company relies on third parties for telecommunication, bandwidth, and co-location services that are included in cost of revenue.

As of September 30, 2023, one vendor accounted for approximately 21.0% of the Company’s accounts payable. No other single vendor exceeded 10% of the Company’s accounts payable at September 30, 2023. At December 31, 2022, one vendor accounted for approximately 37.7% of the Company’s accounts payable. No other single vendor exceeded 10% of the Company’s accounts payable at December 31, 2022. The Company believes there could be a material impact on future operating results should a relationship with an existing significant supplier cease.

q) Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers.

The Company derives substantially all of its revenue by providing cloud-based contact center products under a usage-based model, with prices calculated on a per-call, per-seat, or, more typically, a per-minute basis and contracted minimum usage in accordance with the terms of the underlying agreements. Other immaterial ancillary revenue is derived from call recording, local caller identification packages, performance/speech analytics, text messaging services and professional services billed monthly on primarily usage-based fees and, to a lesser extent, fixed fees. Revenue is recognized when control of these services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those services excluding amounts collected on behalf of third parties such as sales taxes, which are collected on behalf of and remitted to governmental authorities based on local tax law.

The Company determines revenue recognition through the following steps:

a.Identification of the contract, or contracts, with a customer;

b.Identification of the performance obligations in the contract;

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

c.Determination of the transaction price;

d.Allocation of the transaction price to the performance obligations in the contract; and

e.Recognition of revenue when, or as, the performance obligations are satisfied.

The Company enters into contracts that can include various combinations of services, each of which are distinct and accounted for as separate performance obligations. The Company’s cloud-based contact center solutions typically include a promise to provide continuous access to its hosted technology platform solutions through its data centers. Arrangements with customers do not provide the customer with the right to take possession of the Company’s software platform at any time. LiveVox’s performance obligations are satisfied over time as the customer simultaneously receives and consumes the benefits and the Company performs its services. The Company’s contract terms typically range from one to three years with payment terms of net 10-60 days. As the services provided by the Company are generally billed monthly there is not a significant financing component in the Company’s arrangements.

The Company’s arrangements typically include monthly minimum usage commitments and specify the rate at which the customer must pay for actual usage above the monthly minimum. Additional usage in excess of contractual minimum commitments is deemed to be specific to the month that the usage occurs, since the minimum usage commitments reset at the beginning of each month. The Company has determined these arrangements meet the variable consideration allocation exception and therefore, it recognizes contractual monthly commitments and any overages as revenue in the month they are earned.

The Company has service-level agreements with customers warranting defined levels of uptime reliability and performance. Customers may receive credits or refunds if the Company fails to meet such levels. If the services do not meet certain criteria, fees are subject to adjustment or refund representing a form of variable consideration. The Company records reductions to revenue for these estimated customer credits at the time the related revenue is recognized. These customer credits are estimated based on current and historical customer trends, and communications with its customers. Such customer credits have not been significant to date.

For contracts with multiple performance obligations, the Company allocates the contract price to each performance obligation based on its relative standalone selling price (“SSP”). The Company generally determines SSP based on the prices charged to customers. In instances where SSP is not directly observable, such as when the Company does not sell the service separately, the SSP is determined using information that generally includes market conditions or other observable inputs.

Professional services for configuration, system integration, optimization or education are billed on a fixed-price or time and material basis and are performed by the Company directly or, alternatively, customers may also choose to perform these services themselves or engage their own third-party service providers. Professional services revenue, which represents approximately 1.6% of revenue, is recognized over time as the services are rendered.

Deferred revenue represents billings or payments received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual or multi-year minimum usage agreements not yet provided as of the balance sheet date. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as deferred revenue, current in the consolidated balance sheets, with the remainder recorded as deferred revenue, net of current in the Company’s consolidated balance sheets.

r) Costs to Obtain Customer Contracts (Deferred Sales Commissions)

Sales commissions are paid for initial contracts and expansions of existing customer contracts. Sales commissions and related expenses are considered incremental and recoverable costs of acquiring customer contracts. These costs are capitalized and amortized on a straight-line basis over the anticipated period of benefit, which the Company has estimated to be five years. The Company determined the period of benefit by taking into consideration the length of the Company’s customer contracts, the customer attrition rate, the life of the technology provided and other factors. Amortization expense is recorded in sales and marketing expense within the Company’s consolidated statements of operations and comprehensive loss. Amortization expense for the three months ended September 30, 2023 and 2022 was $0.9 million and $0.8 million, respectively, and for the nine months ended September 30, 2023 and 2022 was $2.7 million and $2.3 million, respectively. No impairment losses were recognized during the three and nine months ended September 30, 2023 and 2022.

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

s) Advertising

The Company expenses non-direct response advertising costs as they are incurred. There were no advertising costs capitalized during the three and nine months ended September 30, 2023 and 2022. Advertising expense for the three months ended September 30, 2023 and 2022 was $0.2 million and $0.3 million, respectively, and for the nine months ended September 30, 2023 and 2022 was $1.4 million and $2.0 million, respectively. Advertising expense is included under sales and marketing expense in the accompanying consolidated statements of operations and comprehensive loss.

t) Research and Development Costs

Research and development costs not related to the development of internal use software are charged to operations as incurred. Research and development expenses primarily include payroll and employee benefits, consulting services, travel, and software and support costs.

u) Software Development Costs

The Company capitalizes costs of materials, consultants, payroll, and payroll-related costs of employees incurred in developing internal-use software after certain capitalization criteria are met and includes these costs in the computer software. Refer to Note 5 for additional information. Software development costs are expensed as incurred until preliminary development efforts are successfully completed, management has authorized and committed project funding, it is probable that the project will be completed, and the software will be used as intended. To date, all software development costs have been charged to research and development expense in the accompanying consolidated statements of operations and comprehensive loss. There were no capitalized software development costs related to internal-use software during the three and nine months ended September 30, 2023 and 2022.

v) Income Taxes

Deferred Taxes

The Company accounts for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recognized for the future tax consequences arising from the temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements, as well as from net operating loss and tax credit carryforwards. Deferred tax amounts are determined by using the tax rates expected to be in effect when the taxes will be paid or refunds received, as provided for under currently enacted tax law. A valuation allowance is provided for deferred tax assets that, based on available evidence, are not expected to be realized.

Enactment of the Tax Cuts and Jobs Act in 2017 subjects a U.S. shareholder to current tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. Under U.S. GAAP, an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI resulting from those items in the year of the GILTI inclusion (i.e., as a period expense). The Company has elected to recognize the tax on GILTI as a period expense in the period of inclusion. As such, no deferred taxes are recorded on the Company’s temporary differences that might reverse as GILTI in future years.

Uncertain Tax Positions

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained in a court of last resort. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company does not believe its consolidated financial statements include any uncertain tax positions. It is the Company’s policy to recognize interest and penalties accrued on any unrecognized tax benefit as a component of income tax expense.

w) Stock-Based Compensation

The Company measures compensation expense for stock awards granted to employees and non-employees in accordance with ASC 718, Compensation—Stock Compensation. Stock-based compensation is measured at fair value on grant date. The Company classified all stock awards as equity awards at the grant date, and reassesses the liability versus equity treatment on a quarterly

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

basis for any changes that have occurred during the period presented that may result in a reclassification. Equity-classified awards are recognized as stock-based compensation expense over an employee’s requisite service period or a non-employee’s vesting period on the basis of the grant date fair value. The Company elects to account for forfeitures as they occur, rather than making estimates of future forfeitures.

Management Incentive Units

During 2019, LiveVox TopCo established a Management Incentive Unit program whereby the LiveVox TopCo board of directors has the power and discretion to approve the issuance of Class B Units that represent management incentive units (“MIUs”) to any manager, director, employee, officer or consultant of the Company or its subsidiaries. Vesting begins on the date of issuance, and the MIUs vest ratably over five years with 20% of the MIUs vesting on each anniversary of a specified vesting commencement date, subject to the grantee’s continued employment with the Company on the applicable vesting date. Vesting of the MIUs will accelerate upon consummation of a “sale of the company”, which is defined by the LiveVox TopCo limited liability company agreement.

The Company measures stock-based compensation expense for MIUs based on the grant date fair value of the award estimated by using a Monte Carlo simulation. Monte Carlo simulation is a widely accepted approach for financial instruments with path dependencies. The Company records stock-based compensation expense for the issued and outstanding MIUs based on the service condition on a straight-line basis over the requisite service period of five years, reduced for actual forfeited MIUs.

Please see Note 15 for further detail about stock-based compensation expenses related to MIUs under the Management Incentive Unit program.

2021 Equity Incentive Plan

On June 16, 2021, the stockholders of the Company approved the 2021 Equity Incentive Plan (as amended, the “2021 Plan”), which became effective upon the closing of the SPAC Merger on June 18, 2021. On June 13, 2023, the Compensation Committee approved an amendment to the 2021 Plan to clarify that the limitation on the maximum grant date fair value for awards shall apply only to the Company’s non-employee directors. As of September 30, 2023, the number of shares reserved for issuance is 19,695,679. The Company grants Restricted Stock Units (“RSUs”) and Performance-based Restricted Stock Units (“PSUs”) awards to employees, executives, directors, and eligible consultants of the Company.

RSUs are subject to service conditions only. The Company estimates the grant date fair value of RSUs using the closing price of the Company’s Class A common stock on Nasdaq on the measurement date. Stock-based compensation expense for RSUs issued to employees is recognized on a straight-line basis over the vesting period for the entire award, reduced for actual forfeited RSUs. Stock-based compensation expense for RSUs issued to non-employees is recognized as the goods are received or services are performed. The requisite service period typically ranges from one to six years based on the grantee’s role in the Company. The amount of cumulative compensation cost recognized at any date must at least equal the portion of the grant date value of the award that is vested at that date.

PSUs, which are granted to certain key employees, vest either based on the achievement of predetermined market conditions or based on both service and market conditions. The Company estimates the grant date fair value of PSUs using a Monte Carlo simulation. The Company recognizes stock-based compensation expense for PSUs on a tranche-by-tranche basis (i.e., the accelerated attribution method) over an employee’s requisite service period, which is the longer of the time-vesting period or the derived service period inferred from the valuation model. Stock-based compensation expense of equity-classified PSUs is recognized provided that the good is delivered or the service is rendered, regardless of when, if ever, the market conditions are satisfied.

Payment of the underlying shares in connection with the vesting of employee RSUs and PSUs generally triggers a tax obligation for the employee, which is required to be remitted to the relevant tax authorities. The Company withholds otherwise deliverable RSU or PSU shares having a fair value at the vest date equal to the maximum statutory withholding tax amount and remits the remaining RSU or PSU shares to the employee recipients. Any cash received and paid to meet an employees’ statutory withholding tax requirement is reflected as a financing activity within the consolidated statements of cash flows. During the nine months ended September 30, 2023, the Company withheld 530,919 shares to cover employee recipients’ withholding tax obligations.

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

Non-employee directors acting in their role as members of a board of directors are treated as employees for purpose of ASC 718 if (a) those directors were elected by the Company’s stockholders and (b) the awards granted to non-employee directors are for their services as directors but not for other services. While a non-employee director may be considered an employee under ASC 718, he or she is not considered an employee under the IRS statutory withholding requirements. As a result, no shares are withheld to cover withholding taxes for an award issued to a non-employee director. Independent consultants are non-employees under the IRS statutory withholding requirements. As a result, no shares are withheld to cover withholding taxes for an award issued to an independent consultant.

Please see Note 15 for further detail about stock-based compensation expenses related to RSUs and PSUs under the 2021 Plan.

x) Acquisitions

The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets.

y) Public and Forward Purchase Warrants

Prior to the SPAC Merger, Crescent issued 7,000,000 private placement warrants (“Private Warrants”) and 12,499,995 public warrants (“Public Warrants”) at the close of Crescent’s initial public offering (“IPO”) on March 7, 2019. As an incentive for LiveVox to enter into the SPAC Merger Agreement, pursuant to the Sponsor Support Agreement dated January 13, 2021, Crescent’s sponsor agreed to the cancellation of all of the Private Warrants prior to the Closing Date. In addition, 833,333 Forward Purchase Warrants (“Forward Purchase Warrants”) were issued pursuant to the Forward Purchase Agreement dated January 13, 2021 between Crescent and Old LiveVox. The 12,499,995 Public Warrants and the 833,333 Forward Purchase Warrants (collectively, the “Warrants”) remain outstanding after the SPAC Merger. Each whole Warrant entitles the holder to purchase one share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustments. The Warrants are exercisable at any time prior to June 18, 2026. See Note 12 for further information on stock warrants.

Upon consummation of the SPAC Merger, the Company concluded that (a) the Public Warrants meet the derivative scope exception for contracts in the Company’s own stock and are recorded in stockholders’ equity and (b) the Forward Purchase Warrants do not meet the derivative scope exception and are accounted for as derivative liabilities. Specifically, the Forward Purchase Warrants contain provisions that cause the settlement amounts to be dependent upon the characteristics of the holder of the Warrant which is not an input into the pricing of a fixed-for-fixed option on equity shares. Therefore, the Forward Purchase Warrants are not considered indexed to the Company’s stock and should be classified as a liability. Since the Forward Purchase Warrants meet the definition of a derivative, the Company recorded the Forward Purchase Warrants as liabilities on the consolidated balance sheets at fair value upon the SPAC Merger, with an offsetting entry to additional paid-in capital. The gain or loss resulting from decrease or increase in the fair value of the Forward Purchase Warrants in the subsequent periods is recognized in the consolidated statements of operations and comprehensive loss. The fair value of the Forward Purchase Warrants was measured using the Black-Scholes option-pricing model at each measurement date. See Note 19 for further information on fair value.

z) Restructuring Charges

Restructuring charges associated with management-approved restructuring plans may include employee severance and termination benefits, lease and non-lease contract termination costs, impairment of long-lived assets, and other related costs associated with restructuring activities.

The Company accounts for employee severance and termination benefits that represent a one-time benefit in accordance with ASC 420, Exit or Disposal Cost Obligations. The Company accrues employee severance and termination benefits associated with a one-time benefit arrangement when employees are notified of their termination benefits.

The Company records employee severance and termination benefits in accordance with ASC 712, Compensation - Nonretirement and Postemployment Benefits, if it pays the benefits as part of an ongoing benefit arrangement, which includes benefits provided as part of its established severance policies, a consistent past practice or in accordance with statutory requirements. The Company

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

accrues employee severance and termination benefits associated with an ongoing benefit arrangement when the payment is probable and the amount is reasonably estimable.

Non-lease contract termination costs and other costs associated with restructuring activities are recorded in accordance with ASC 420.

Please see Note 22 for a full description of the Company’s restructuring actions.

aa) Recently Adopted Accounting Pronouncements

As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an EGC. The Company adopted the following new accounting pronouncements during the nine months ended September 30, 2023:

ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) and Codification Improvement Amendments

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, which changes the impairment model for most financial assets, which includes the Company’s accounts receivable and other financial instruments. The new standard replaces the existing incurred loss impairment model with a current expected credit loss impairment model. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to AFS debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Topic 326, Financial Instruments—Credit Losses. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which clarifies treatment of certain credit losses. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief, which permits an entity, upon adoption of ASU No. 2016-13, to irrevocably elect the fair value option (on an instrument-by-instrument basis) for eligible financial assets measured at amortized cost basis. In November 2019, FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), which changes the effective dates for Topic 326 to give implementation relief to certain types of entities. In November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which includes various narrow-scope improvements and clarifications. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments, which clarifies and improves certain financial instruments guidance. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the recognition and measurement guidance for a troubled debt restructuring for creditors that have adopted ASU No. 2016-13 and also requires public business entities to present current-period gross write-offs (on a current year-to-date basis for interim-period disclosures) by year of origination in their vintage disclosures. ASU 2016-13 and all subsequent updates are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, for annual reporting periods beginning after December 15, 2022 and interim periods within those fiscal years. The Company adopted these new standards effective January 1, 2023 on a modified retrospective basis, and the adoption did not result in a material cumulative-effect adjustment in its consolidated financial statements. Please refer to Note 2(i) and Note 2(j) for additional information relating to the Company’s application of new standards to its marketable securities and accounts receivable, respectively.

ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50)

In September 2022, the FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about their obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance is effective for all entities for fiscal years beginning after December 15, 2022, including interim periods in those fiscal years, except for the rollforward requirement, which is effective for fiscal years beginning after December 15, 2023. The Company adopted this standard effective January 1, 2023 utilizing a retrospective method of transition, except for the rollforward requirement which the Company applied

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

prospectively. The adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. See Note 7 for further information on the Company's supplier finance program.

ASU No. 2023-03, Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718)

In July 2023, the FASB issued ASU No. 2023-03, Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718), which amends or supersedes various SEC paragraphs in the ASC pursuant to SEC Staff Accounting Bulletin No. 120, SEC staff announcement at the March 24, 2022, Emerging Issues Task Force meeting, and SEC Staff Accounting Bulletin Topic 6.B, Accounting Series Release No. 280 — General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. This update adds interpretive guidance for public companies to consider when entering into share-based payment transactions while in possession of material non-public information. As this pronouncement does not provide any new guidance, there is no transition or effective date associated with its adoption. Accordingly, the Company adopted this standard immediately upon its issuance. The adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

bb) Recently Issued Accounting Pronouncements

ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments and contracts on an entity’s own equity, including removing certain conditions for equity classification, and amending certain guidance on the computation of EPS for contracts on an entity’s own equity. The guidance is effective for public business entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, the guidance is effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Entities can elect to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the impact this pronouncement will have on its consolidated financial statements and plans to adopt this standard effective January 1, 2024.

3. Revenue

Contract Balance

The following table provides information about accounts receivable, net, and contract liabilities from contracts with customers. The Company did not have any contract assets as of September 30, 2023 and December 31, 2022 (dollars in thousands):


	September 30, 2023		December 31, 2022
Accounts receivable, net	$	23,807	$	21,447
Contract liabilities, current (deferred revenue)	1,303		1,318
Contract liabilities, non-current (deferred revenue)	450		338

Changes in the contract liabilities balances are as follows (dollars in thousands):


	September 30, 2023		December 31, 2022		$ Change
Contract liabilities (deferred revenue)	$	1,753	$	1,656	$	97

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

The increase in deferred revenue was due to billings in advance of performance obligations being satisfied, net of revenue recognized for services rendered during the period presented. Revenue of $0.1 million and $1.2 million was recognized during the three and nine months ended September 30, 2023, respectively, which was included in the deferred revenue balance at the beginning of the period. Revenue of $0.3 million and $1.2 million was recognized during the three and nine months ended September 30, 2022, respectively, which was included in the deferred revenue balance at the beginning of the period.

Remaining Performance Obligations

Remaining performance obligations represent the contracted minimum usage commitments and do not include an estimate of additional usage in excess of contractual minimum commitments. The Company’s contract terms typically range from one to three years. Revenue as of September 30, 2023 that has not yet been recognized was approximately $164.8 million, of which $93.1 million and $71.7 million is expected to be recognized as revenue within one year and beyond one year, respectively. As of September 30, 2023, the Company expects to recognize revenue on the remaining performance obligations over the next 83 months.

4. Marketable Securities

As of September 30, 2023 and December 31, 2022, the Company designated all marketable securities as debt securities and classified them as AFS. There were no transfers of debt securities among AFS, HTM and trading categories during the three and nine months ended September 30, 2023 and 2022.

The following table presents the amortized cost, gross unrealized gains and losses, and fair value of the Company’s AFS debt securities at September 30, 2023 aggregated by major security type (dollars in thousands):


	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
U.S. corporate securities	$	33,350	$	—	$	(481)	$	32,869
U.S. government securities	2,459		—		(20)		2,439
Asset-backed securities	8,356		—		(211)		8,145
Other debt securities	749		—		(10)		739
Total available for sale securities	44,914		—		(722)		44,192
Total debt securities	$	44,914	$	—	$	(722)	$	44,192

The following table presents the amortized cost, gross unrealized gains and losses, and fair value of the Company’s AFS debt securities at December 31, 2022 aggregated by major security type (dollars in thousands):


	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
U.S. corporate securities	$	40,186	$	4	$	(1,112)	$	39,078
U.S. government securities	1,479		—		(2)		1,477
Asset-backed securities	7,181		8		(277)		6,912
Other debt securities	747		—		(32)		715
Total available for sale securities	49,593		12		(1,423)		48,182
Total debt securities	$	49,593	$	12	$	(1,423)	$	48,182

Refer to Note 19 for additional information regarding the fair value measurements of the Company’s marketable securities.

Maturity Analysis

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

The following table presents the amortized cost and fair value of the Company’s AFS debt securities by contractual maturities at September 30, 2023 (dollars in thousands):


As of September 30, 2023	Amortized Cost		Fair Value
Due in one year or less	$	16,268	$	16,015
Due after one year through five years	28,646		28,177


Total available for sale securities	44,914		44,192
Total debt securities	$	44,914	$	44,192

Sales of Marketable Securities

Proceeds from sale of AFS debt securities and the associated gains and losses realized in earnings during the three and nine months ended September 30, 2023 and 2022 are listed below (dollars in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Proceeds from sale of available for sale debt securities	$	1,491	$	—	$	11,588	$	3,451

Gross realized gain	$	—	$	—	$	—	$	—
Gross realized loss	(9)		—		(83)		(42)
Net realized loss on sale of available for sale debt securities	$	(9)	$	—	$	(83)	$	(42)

Allowance for Credit Losses

At September 30, 2023, the Company reviewed 85 individual AFS debt securities in unrealized loss positions and determined that it does not intend to sell these securities and it is not more likely than not that it will be required to sell these securities before recovery of their amortized cost bases. The Company concluded that the unrealized losses identified as of September 30, 2023 are due to short-term interest rate fluctuations, and not credit losses. Further, the Company noted that the present value of future cash flows discounted using the effective interest rate at the date the security was acquired was equal to or greater than the book value of the security, which further supports the conclusion that there is no credit loss. As such, the Company determined no credit loss existed and did not record an allowance for credit losses for its AFS debt securities at September 30, 2023. The Company will continue to monitor its AFS debt securities on a quarterly basis to assess whether there have been any additional indicators of credit losses.

The following table presents the fair value and unrealized losses of the Company’s AFS debt securities that are in unrealized loss positions and for which an allowance for credit losses has not been recorded at September 30, 2023 (dollars in thousands):


	In Unrealized Loss Position For Less Than 12 Months				In Unrealized Loss Position For 12 Months Or Longer
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
U.S. corporate securities	$	16,398	$	(256)	$	16,471	$	(225)
U.S. government securities	490		(2)		1,949		(18)
Asset-backed securities	2,782		(89)		5,363		(122)
Other debt securities	739		(10)		—		—
Total available for sale securities	20,409		(357)		23,783		(365)
Total debt securities	$	20,409	$	(357)	$	23,783	$	(365)

At December 31, 2022, the Company reviewed 83 individual AFS debt securities in unrealized loss positions and determined that it did not intend to sell these securities and it is not more likely than not that it would be required to sell these securities

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

before recovery of their amortized cost bases. The Company concluded that the unrealized losses identified as of December 31, 2022 were due to short-term interest rate fluctuations, and did not result from credit losses. Further, the Company noted that the present value of future cash flows discounted using the effective interest rate at the date the security was acquired was equal to or greater than the book value of the security, which further supports the conclusion that there was no credit loss. As such, the unrealized loss remains appropriately recorded in other comprehensive income (loss) as of December 31, 2022 and is not adjusted at adoption of ASC 326.

The following table presents the fair value and unrealized losses of the Company’s AFS debt securities that are in an unrealized loss position at December 31, 2022 (dollars in thousands):


	In Unrealized Loss Position For Less Than 12 Months				In Unrealized Loss Position For 12 Months Or Longer
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
U.S. corporate securities	$	23,625	$	(464)	$	15,453	$	(648)
U.S. government securities	995		(2)		482		—
Asset-backed securities	1,034		(13)		5,878		(264)
Other debt securities	—		—		715		(32)
Total available for sale securities	25,654		(479)		22,528		(944)
Total debt securities	$	25,654	$	(479)	$	22,528	$	(944)

Accrued Interest

Accrued interest receivable on AFS debt securities at September 30, 2023 and December 31, 2022 was $0.3 million and $0.2 million, respectively, and was excluded from both the fair value and the amortized cost basis of AFS debt securities and was recorded within prepaid expenses and other current assets in the Company’s consolidated balance sheets. There was no interest reversed during the three and nine months ended September 30, 2023 and 2022.

5. Property and Equipment

Property and equipment consisted of the following at September 30, 2023 and December 31, 2022 (dollars in thousands):


	September 30, 2023		December 31, 2022
Computer software	$	429	$	426
Computer equipment	3,344		3,408
Furniture and fixtures	1,338		1,736
Leasehold improvements	1,319		1,525
Total	6,430		7,095
Less: accumulated depreciation and amortization	(4,503)		(4,477)
Property and equipment, net	$	1,927	$	2,618

During the three and nine months ended September 30, 2023, the Company disposed of property and equipment that were fully or not fully depreciated with a gross book value totaling $0.9 million and a net book value of $0.1 million. The Company recognized a net loss on disposals of property and equipment of $0.1 million during the three and nine months ended September 30, 2023, which was included within other income (expense), net in the consolidated statements of operations and comprehensive loss. During the three and nine months ended September 30, 2022, the Company disposed of fully depreciated property and equipment with a gross book value totaling $8.3 million. The net loss recognized on disposals of property and equipment was immaterial during the three and nine months ended September 30, 2022.

Depreciation and amortization expense for property and equipment totaled $0.2 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively, and totaled $0.7 million and $0.9 million for the nine months ended

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LIVEVOX HOLDINGS, INC.

Notes to the Consolidated Financial Statements (Unaudited)

September 30, 2023 and 2022, respectively. Amortization of computer software charged to operations for the three months ended September 30, 2023 and 2022 was immaterial for both periods, and is included in depreciation expense. Amortization of computer software charged to operations for the nine months ended September 30, 2023 and 2022 was $0.1 million and $0.1 million, respectively.

6. Goodwill and Identified Intangible Assets

Goodwill

Goodwill was recorded as a result of the acquisition of the Company in 2014 by funds affiliated with Golden Gate Capital and the acquisitions made by the Company in 2019 of Teckst Inc. and SpeechIQ LLC.

Subsequent to the annual impairment test completed during the fourth quarter of 2022, the Company believes there have been no triggering events that would require an impairment review of goodwill outside of the required annual impairment review. For the three and nine months ended September 30, 2023 and 2022, there was no impairment to the carrying value of the Company’s goodwill.

There were no changes in the carrying amount of goodwill during the nine months ended September 30, 2023 or the year ended December 31, 2022.

Identified Intangible Assets

Intangible assets were acquired in connection with the acquisition of the Company in March 2014 by Golden Gate Capital, and the Company’s acquisition of Teckst Inc., SpeechIQ LLC and BusinessPhone in October 2019, December 2019, and February 2021, respectively.

Amortization expense related to the Company’s identified intangible assets was $0.8 million and $0.8 million for the three months ended September 30, 2023 and 2022, respectively, and $2.4 million and $2.7 million for the nine months ended September 30, 2023 and 2022, respectively. On the face of the consolidated statements of operations and comprehensive loss the amortization of technology-based intangible assets is included within cost of revenue, the amortization of marketing-based and customer-based intangible assets are included within sales and marketing expense, and the amortization of the acquired workforce is included within cost of revenue and research and development expense.

Identified intangible assets consisted of the following at September 30, 2023 (dollars in thousands):


	Cost		Accumulated Amortization		Carrying Amount		Weighted Average Remaining Life (In Years)
Marketing-based	$	1,400	$	(1,384)	$	16	0.21
Technology-based	18,300		(17,847)		453		0.60
Customer-based	27,700		(14,138)		13,562		6.64
Workforce-based	380		(157)		223		7.35
	$	47,780	$	(33,526)	$	14,254

Identified intangible assets consisted of the following at December 31, 2022 (dollars in thousands):


	Cost		Accumulated Amortization		Carrying Amount		Weighted Average Remaining Life (In Years)
Marketing-based	$	1,400	$	(1,328)	$	72	0.96
Technology-based	18,300</