LIVEVOX HOLDINGS, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

Throughout this section, unless otherwise noted, the "Company," "LiveVox," "we,"
"us," and "our" refers to LiveVox Holdings, Inc., and its subsidiaries,
collectively. You should read the following discussion and analysis of our
financial condition and results of operations in conjunction with our unaudited
interim consolidated financial statements and related notes thereto included in
Part I, Item 1 of this Quarterly Report on Form 10-Q (this "Quarterly Report").
In addition to historical information, the following discussion and analysis
contains forward-looking statements that involve risks, uncertainties and
assumptions. Our actual results may differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including, but
not limited to, those set forth in the section entitled "Item 1A. Risk Factors"
in our Annual Report on Form 10-K ("Annual Report") filed with the SEC on March
11, 2022.

Overview

We enable next-generation cloud contact center functionality through a cloud
contact-center-as-a-service (or CCaaS) platform that we provide for enterprises,
business process outsourcers (BPOs) and collections agencies. Our CCaaS platform
provides customers with a scalable, cloud-based architecture and pre-integrated
artificial intelligence (AI) capabilities to support enterprise-grade
deployments of our solutions including omnichannel customer connectivity,
customer relationship management (CRM) and workforce optimization (WFO). Our
omnichannel product offerings enable our customers to connect with their
customers via their channel of choice, including human voice, virtual agents
powered by artificial intelligence (AI), email, text or web chat. Our platform
features a native CRM which unifies disparate, department-level systems of
record to present contact center agents with a single view of its customers
without displacing or replacing existing CRMs or other systems of record. Our
WFO offerings include a lightweight yet fully-featured product that meets the
needs of smaller or less mature contact center operations as well as seamless
integration with WFO products from other providers.

We typically sell our products to customers under one- to four-year subscription
contracts that stipulate a minimum amount of monthly usage and associated
revenue with the ability for the customer to consume more usage above the
minimum contract amount each month. Our subscription revenue is comprised of the
minimum usage revenue under contract (which we call "contract revenue") and
amounts billed for usage above the minimum contract value (which we call "excess
usage revenue"), both of which are recognized on a monthly basis following
deployment to the customer. Excess usage revenue is deemed to be specific to the
month in which the usage occurs, since the minimum usage commitments reset at
the beginning of each month. Subscription revenue (i.e., contract revenue and
excess usage revenue) accounted for 98.1% and 97.9% for the three and six months
ended June 30, 2022, respectively, and 97.7% and 97.7% for the three and six
months ended June 30, 2021, respectively, of our total revenue with the
remainder consisting of professional services and other non-recurring revenue
derived from the implementation of our products.


Issues Affecting Comparability

by LiveVox financial condition and results of operations may not be comparable from period to period due to the Amalgamation (as defined below) and going public.

Pursuant to Accounting Standards Codification ("ASC") 805, Business
Combinations, the merger between LiveVox Holdings, Inc. (hereinafter referred to
as "Old LiveVox") and Crescent Acquisition Corp ("Crescent") consummated on June
18, 2021 (the transaction referred to as the "Merger") was accounted for as a
reverse recapitalization, rather than a business combination, for financial
accounting and reporting purposes. Accordingly, Old LiveVox was deemed the
accounting acquirer (and legal acquiree) and Crescent was treated as the
accounting acquiree (and legal acquirer). Under this method of accounting, the
reverse recapitalization was treated as the equivalent of Old LiveVox issuing
stock for the net assets of Crescent, accompanied by a recapitalization. The net
assets of Crescent are stated at historical cost, with no goodwill or other
intangible assets recorded. The consolidated assets, liabilities and results of
operations prior to the Merger are those of Old LiveVox. The shares and
corresponding capital amounts and earnings per share available for common
stockholders, prior to the Merger, have been retroactively restated as shares
reflecting the exchange ratio established in the Merger Agreement dated January
13, 2021.


Impact of COVID-19

While impacts associated with COVID-19 had certain adverse impacts on our
business and operating results in the first two quarters of fiscal 2020, we have
not experienced a sustained disruption in our overall business other than as
described below.

In March of fiscal 2020, we began to experience softness in our excess usage
revenue in relation to our contract revenue (as evidenced by the calculation of
total revenue divided by contract revenue which we call the "usage multiplier")
as a result of the COVID-19 pandemic and this softness continued to persist
through the end of fiscal 2021. We attribute this softness to financial stimulus
packages designed to address the financial hardships of Americans brought about
by the COVID-19 pandemic which allowed
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many of our customers in the collections industry to meet their collection goals
with fewer interactions with debtors. As a result, our usage multiplier declined
sequentially from the fourth quarter of fiscal 2020 to the second quarter of
fiscal 2021. In the second half of fiscal 2021 our usage multiplier increased
slightly over the second quarter of fiscal 2021, but remained below the first
quarter of fiscal 2021. When the effects of the pandemic and the associated
financial stimulus (including, but not limited to direct stimulus payments,
extensions and enhancements of unemployment benefits and loan forbearances)
dissipate and there is a return to growth in consumer debt relative to
disposable income, we believe the usage multiplier will recover to normal
historical levels. As that relationship moves towards normal historical levels,
our excess usage revenue is likely to grow faster than our contract revenue. The
impact of COVID-19 in the first and second quarter of fiscal 2022 is described
under "-Usage Impacts on the First Quarter of Fiscal 2022 relative to the Fourth
Quarter of Fiscal 2021-" and "-Usage Impacts on the Second Quarter of Fiscal
2022 relative to the First Quarter of Fiscal 2022-" below.


Impact of Consumer Financial Protection Bureau (CFPB) Seven vocal attempts in seven days

The dialing practices of several of our larger BPOs and collection customers
were constrained by Regulation F, which took effect on November 30, 2021.
Regulation F governs third-party debt collectors and, among other things, limits
the number of call attempts that a debt collector may make to a consumer to
seven calls per account within a seven day period (sometimes referred to as "7
in 7"). Once the debt collector makes actual contact with a consumer, the debt
collector may not call the consumer again about that same account for a
seven-day period. Excess usage revenue in December 2021 was impacted by
approximately $1.0 million as many customers conservatively changed their
dialing pattern to less than 7 in 7. We have been actively presenting a best
practice designed to enhance our customers' profitability that replaces their
previous behavior with a Regulation F-compliant calling regimen supplemented by
best-time dial technology and/or 2 text messages per week. Sales of our Attempt
Supervisor product have increased in the fourth quarter of fiscal 2021, and
while we expect sales of this product to continue to increase in 2022, we
continue to believe the conservative dialing behavior demonstrated by our
customers immediately following the implementation of Regulation F will be
replaced by behavior that optimizes the profitability of our customers in the
future. We believe that our recommended best practices, if implemented, will
result in higher collection results for our customers, at a lower labor cost
with a slight increase in software costs. However, there can be no assurance as
to when our customers will adopt our recommended Regulation F-compliant
practices, if at all. For the fourth quarter of fiscal 2021, our usage
multiplier was unfavorably impacted by approximately 0.04x. The impact of
Regulation F rules in the first and second quarter of fiscal 2022 is described
under "-Usage Impacts on the First Quarter of Fiscal 2022 relative to the Fourth
Quarter of Fiscal 2021-" and "-Usage Impacts on the Second Quarter of Fiscal
2022 relative to the First Quarter of Fiscal 2022-" below.


Utilization impacts in the first quarter of fiscal 2022 compared to the fourth quarter of fiscal 2021

Our business and results of operations in the first quarter of Fiscal 2022 were impacted by a number of variables, including:

•Regulation F rules were in effect for all three months of the first quarter of FY2022, compared to December of FY21 alone. It is unknown how many customers adopted our recommended best practices;

•Increased originations and delinquencies, which are leading indicators of the
expected dissipation of the effects of the COVID-19 pandemic and the associated
financial stimulus. In the first quarter of fiscal 2022, these increases have
translated, and we believe will continue to translate into higher minute and
digital volumes over time;

•Increased volume during tax season, as refunds improve the efficiency of our clients’ collection efforts;

•The cumulative effect of external events on the behavior of our customers, a
tight labor market, increased uncertainty caused by higher inflation and the
invasion of Ukraine by Russia; and

•Our mix of non-recurring and professional services revenue declined from 4% of
total revenue in the fourth quarter of fiscal 2021 to 3% in the first quarter of
fiscal 2022, driving a 0.01x unfavorable reduction in the multiplier.

The combined effect of these variables has unfavorably impacted our usage
multiplier metric which measures the relationship between total revenue and
contracted revenue. Total revenue divided by contracted revenue decreased from
1.31x in the fourth quarter of fiscal 2021 to 1.27x in the first quarter of
fiscal 2022. While we can quantify the effect of product mix on the multiplier
indicator, we cannot differentiate the impact of the other variables. However,
our collections customers were flat sequentially, indicating that the decline
was driven by our blended BPOs and customer engagement customer categories.


Utilization impacts on the second quarter of fiscal 2022 compared to the first quarter of fiscal 2022

Our business and results of operations in the second quarter of Fiscal 2022 were impacted by a number of variables, including:

• Regulation F rules have been in effect since November 2021. It is still unknown how many customers have adopted our recommended best practices;

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•We believe increased originations and delinquencies are leading indicators of
the expected dissipation of the effects of the COVID-19 pandemic and the
associated financial stimulus. In the second quarter of fiscal 2022, these
increases have translated, and we believe will continue to translate into higher
minute and digital volumes over time;

•A slight drop in volume for our collection clients, as the absence of tax refunds after the tax season translates into lower collection yields;

•The cumulative effect of external events on the behavior of our customers, a
tight labor market, increased uncertainty caused by higher inflation and the
invasion of Ukraine by Russia; and

• Our non-recurring revenue and professional services mix decreased from 2.4% of total revenue in the first quarter of fiscal 2022 to 1.9% in the second quarter of fiscal 2022, resulting in an unfavorable reduction of 0 .01x of the multiplier.

The combined effect of these variables has unfavorably impacted our usage
multiplier metric which measures the relationship between total revenue and
contracted revenue. Total revenue divided by contracted revenue decreased from
1.27x in the first quarter of fiscal 2022 to 1.23x in the second quarter of
fiscal 2022. While we can quantify the effect of product mix on the multiplier
indicator, we cannot differentiate the impact of the other variables. However,
like last quarter, our collections customers were flat sequentially, indicating
that the decline was driven by our blended BPOs and customer engagement customer
categories.


LiveVox's Segments

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

Key Non-GAAP Operational and Financial Performance Indicators

In addition to the financial performance measures presented in our consolidated financial statements, we monitor the key indicators set out below to help us assess growth trends, establish budgets, measure the effectiveness of our sales efforts and marketing and to assess operational effectiveness.

LTM Net Revenue Retention Rate

We believe that our LTM Net Revenue Retention Rate provides us and investors
with insight into our ability to retain and grow revenue from our customers and
is a meaningful measure of the long-term value of our customer relationships. We
calculate LTM Net Revenue Retention Rate by dividing the recurring revenue
recognized during the most recent LTM period by the recurring revenue recognized
during the LTM period immediately preceding the most recent LTM period,
provided, however, that recurring revenue from a customer in the most recent LTM
period is excluded from the calculation if recurring revenue was not recognized
from that customer in the preceding LTM period. Customers who cease using our
products during the most recent LTM period are included in the calculation. For
example, LTM Net Revenue Retention for the 12-month period ending June 2022
includes recurring revenue from all customers for whom revenue was recognized
from July of 2020 to June of 2021 regardless of whether such customers
increased, decreased, or stopped their use of our products during that period
(i.e., old customers), but excludes recurring revenue from all customers who
began using our services from July of 2021 to June of 2022 (i.e., new
customers). We define monthly recurring revenue as recurring monthly contract
and excess usage revenue, which we calculate separately from one-time,
non-recurring revenue by month by customer. We consider all contract and excess
usage revenue, which represents 98% of our revenue, to be recurring revenue as
all of our contracts provide for a minimum commitment amount. We consider
professional services revenue and one-time adjustments, which are booked on a
one-time, nonrecurring basis, to be non-recurring revenue. Professional services
and other one-time adjustments are generally not material to the result of the
calculation. However, one-time non-recurring revenue is important with respect
to timing as we bill installation and non-standard statement of work fees
immediately and recognize the revenue as the work is completed, which is
generally in advance of the beginning of recurring revenue which is when we
recognize the beginning of the LTM period immediately preceding the most recent
LTM period.

The following table shows our LTM Net Revenue Retention Rate for the periods
presented:

                                           Twelve Months Ended June 30,                       Twelve Months Ended December 31,
                                            2022                   2021                         2021                          2020
LTM Net Revenue Retention Rate                  108  %                 105  %                              105  %                 106  %


Our LTM Net Revenue Retention Rate reflects the expansion over time of our
existing customers as they add new products and additional units of service. A
much higher percentage of the product revenue from our customers is contracted
on our per minute
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pricing model with minimum commitment versus our agent pricing model with minimum commitments for agents and service units.

Our LTM Net Revenue Retention Rate increased by 3 percentage points, to 108% in
the twelve months ended June 30, 2022 from 105% in the twelve months ended
June 30, 2021 primarily as a result of the tapering of the impact of COVID-19
and the related decrease in excess usage revenue that occurred from the first
quarter of fiscal 2020 (which is no longer included in the calculation to the
third quarter of 2020). In addition, monthly minimum contract revenue for
customers grew by 22% from the twelve months ended June 30, 2021 to the twelve
months ended June 30, 2022.

Our LTM Net Revenue Retention Rate decreased by 1 percentage point, to 105% in
the twelve months ended December 31, 2021 from 106% in the twelve months ended
December 31, 2020 primarily as a result of the impact of COVID-19 and the
related decrease in excess usage revenue, described above. Despite the decline
in LTM Net Revenue Retention Rate, monthly minimum contract revenue for
customers grew by 26% from fiscal 2020 to fiscal 2021.


Adjusted EBITDA

We monitor Adjusted EBITDA, a non-generally accepted accounting principle
("Non-GAAP") financial measure, to analyze our financial results and believe
that it is useful to investors, as a supplement to U.S. GAAP measures, in
evaluating our ongoing operational performance and enhancing an overall
understanding of our past financial performance. We believe that Adjusted EBITDA
helps illustrate underlying trends in our business that could otherwise be
masked by the effect of the income or expenses that we exclude from Adjusted
EBITDA. Furthermore, we use this measure to establish budgets and operational
goals for managing our business and evaluating our performance. We also believe
that Adjusted EBITDA provides an additional tool for investors to use in
comparing our recurring core business operating results over multiple periods
with other companies in our industry.

Adjusted EBITDA should not be considered in isolation from, or as a substitute
for, financial information prepared in accordance with U.S. GAAP, and our
calculation of Adjusted EBITDA may differ from that of other companies in our
industry. We compensate for the inherent limitations associated with using
Adjusted EBITDA through disclosure of these limitations, presentation of our
consolidated financial statements in accordance with U.S. GAAP and
reconciliation of Adjusted EBITDA to the most directly comparable U.S. GAAP
measure, net loss. We calculate Adjusted EBITDA as net loss before
(a) depreciation and amortization, (b) long-term equity incentive bonus, (c)
stock-based compensation expense, (d) interest expense, net, (e) change in the
fair value of warrant liability, (f) other expense, net, (g) provision for
(benefit from) income taxes, and (h) other items that do not directly affect
what we consider to be our core operating performance.

The following table provides a reconciliation of net loss and adjusted EBITDA for the periods presented (in thousands of dollars):

                                                            Three Months Ended                   Six Months Ended June 30,
                                                           June 30, (unaudited)                         (unaudited)
                                                          2022                2021                2022                2021
Net loss                                             $   (10,780)         $ (75,843)         $   (23,767)         $ (80,018)
Non-GAAP adjustments:
Depreciation and amortization (1)                          1,085              1,602                2,431              3,205
Long-term equity incentive bonus and stock-based
compensation expenses (2)(3)                               3,423             69,423                5,902             69,965
Interest expense, net                                        744                941                1,494              1,885
Change in the fair value of warrant liability                (92)              (375)                (484)              (375)
Other expense, net                                           113                 32                   49                 25

Commissions and costs related to acquisition and financing (4)

                                                            -              1,041                    -              1,041
Transaction-related costs (4)                                183                570                  183              1,303
Golden Gate Capital management fee expenses (4)                -                (25)                   -                146
Provision for (benefit from) income taxes                   (229)                51                  315                 86

Adjusted EBITDA                                      $    (5,553)         $  (2,583)         $   (13,877)         $  (2,737)


(1) Amortization expense included in our results of operations is as follows (in thousands of dollars):

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                                                             Three Months Ended                  Six Months Ended June 30,
                                                            June 30, (unaudited)                        (unaudited)
                                                           2022                  2021              2022              2021
Cost of revenue                                     $       342               $   911          $     952          $ 1,858
Sales and marketing expense                                 613                   602              1,221            1,178
General and administrative expense                           94                    54                186              102
Research and development expense                             36                    35                 72               67
Total depreciation and amortization                 $     1,085             

$1,602 $2,431 $3,205

(2) The long-term equity incentive awards included in our results of operations are as follows (in thousands of dollars):

                                                         Three Months Ended                Six Months Ended June 30,
                                                        June 30, (unaudited)                      (unaudited)
                                                       2022              2021                2022               2021
Cost of revenue                                     $      -          $  9,619          $         -          $  9,658
Sales and marketing expense                                -            17,964                    -            18,087
General and administrative expense                         -            18,307                    -            18,401
Research and development expense                           -            23,394                    -            23,541
Total long-term equity incentive bonus              $      -          $ 

$69,284 – $69,687

(3) Stock-based compensation expense included in our results of operations is as follows (in thousands of dollars):

                                                           Three Months Ended                Six Months Ended June 30,
                                                          June 30, (unaudited)                      (unaudited)
                                                         2022                2021              2022               2021
Cost of revenue                                     $        403          $    14          $      715          $    28
Sales and marketing expense                                  870               28               1,477               56
General and administrative expense                           941               69               1,601              138
Research and development expense                           1,209               28               2,109               56
Total stock-based compensation expenses             $      3,423          $ 

139 $5,902 $278

(4) Included in general and administrative expenses for all periods presented.

Non-GAAP Gross Profit and Non-GAAP Gross Margin Percentage

U.S. GAAP defines gross profit as revenue less cost of revenue. Cost of revenue
includes all expenses associated with our various product offerings as more
fully described under the caption "-Components of Results of Operations-Cost of
Revenue-" below. We define Non-GAAP gross profit as gross profit after adding
back the following items:

•depreciation and amortization;

•long-term stock incentive and stock-based compensation expense; and

• other non-recurring expenses

We add back depreciation and amortization, long-term equity incentive bonus and
stock-based compensation expenses and other non-recurring expenses because they
are one-time or non-cash items. We eliminate the impact of these one-time or
non-cash items because we do not consider them indicative of our core operating
performance. Their exclusion facilitates comparisons of our operating
performance on a period-to-period basis. Therefore, we believe showing Non-GAAP
gross margin to remove the impact of these one-time or non-cash expenses is
helpful to investors in assessing our gross profit and gross margin performance
in a way that is similar to how management assesses our performance.

We calculate non-GAAP gross margin percentage by dividing non-GAAP gross profit by revenue, expressed as a percentage of revenue.

Management uses Non-GAAP gross profit and Non-GAAP gross margin percentage to
evaluate operating performance and to determine resource allocation among our
various product offerings. We believe Non-GAAP gross profit and Non-GAAP gross
margin percentage provide useful information to investors and others to
understand and evaluate our operating results in the same manner as our
management and board of directors and allows for better comparison of financial
results among our competitors. Non-GAAP gross profit and Non-GAAP gross margin
percentage may not be comparable to similarly titled measures of other companies
because other
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companies cannot calculate non-GAAP gross profit and non-GAAP gross margin percentage or similarly titled measures in the same way as we do.

The following table provides a reconciliation of gross profit to non-GAAP gross profit for the periods presented (in thousands of dollars):

                                                        Three Months Ended                  Six Months Ended June 30,
                                                       June 30, (unaudited)                        (unaudited)
                                                      2022               2021                2022                2021
Gross profit                                      $   20,439          $  7,298          $   38,900            $ 24,063
Depreciation and amortization                            342               911                 952               1,858
Long-term equity incentive bonus and stock-based
compensation expenses                                    403             9,633                 715               9,686

Non-GAAP gross profit                             $   21,184          $ 17,842          $   40,567            $ 35,607

Gross margin %                                          62.0  %           25.2  %             59.8    %           42.3  %
Non-GAAP gross margin %                                 64.2  %           61.7  %             62.3    %           62.6  %


Components of operating results

Revenue

We derive revenue by providing products under a variety of pricing models. Our
recently released AI Virtual Agent product and our historical Voice product are
provided under a usage-based pricing model with prices calculated on a
per-minute basis with a contracted minimum commitment in accordance with the
terms of the underlying pricing agreements. Voice is our predominant source of
revenue. Other revenue sources are derived from products under the following
pricing models:

1)a per “unit of measure” with minimum commitment (e.g. Speech IQ);

2) combining per-agent and per-“unit-of-measure” models with minimum contractual commitments for each (eg, SMS, email, U-CRM services);

3)a per agent pricing model with a minimum agent commitment (e.g., U-Script,
U-Ticket, U-Chat, U-Quality Management, U-Screen Capture, U-CSAT, U-BI, Hosted
PBX services); and

4) A per agent pricing model with a minimum agent commitment with a maximum monthly commitment (eg PDAS – our compliance product, U-BI).

Outside of Voice, our pricing models detailed above are relatively new to the market and not yet financially material to our business.


Cost of Revenue

Our cost of revenue consists of personnel costs and associated costs such as
travel, information technology, facility allocations and stock-based
compensation for Implementation and Training Services, Customer Care, Technical
Support, Professional Services, User Acceptance Quality Assurance, Technical
Operations and VoIP services to our customers. Other costs of revenue include
non-cash costs associated with depreciation and amortization including acquired
technology, charges from telecommunication providers for communications, data
center costs and costs to providers of cloud communication services, software,
equipment maintenance and support costs to maintain service delivery operations.

In the fourth quarter of fiscal 2021, we completed a major strategic milestone
when our data center transitioned from a model based on maintaining a
co-location facility with our own capital equipment to a 100% cloud strategy
based on monthly recurring charges for capacity added in generally small step
function increments. As a result, we have reduced our capital expenditures for
data center equipment, which has slowed growth in depreciation and increased our
data center costs for our cloud provisioning. We expect feature release
efficiencies for our cloud operations as research and development resources
eliminate the release effort associated with our co-location deployment. We have
accelerated depreciation expense associated with the change in useful life
estimate of the co-location facility.

As our business grows, we expect to realize economies of scale in our cost of
revenue. We use the LiveVox platform to facilitate data-driven innovations to
identify and facilitate efficiency improvement to our implementation, customer
care and support, and technical operations teams. Additionally, our research and
development priorities include ease of implementation, reliability and ease of
use objectives that reduce costs and result in economies of scale relative to
revenue growth.
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Functionnary costs

We classify our operating expenses into sales and marketing, general and administrative expenses, and research and development.

Sales and Marketing. Sales and marketing expenses consist primarily of salaries
and related expenses, including stock-based compensation, for personnel in sales
and marketing, sales commissions, channel special program incentive funds
(SPIFF) and channel commissions, travel costs, as well as marketing pipeline
management, content delivery, programs, campaigns, lead generation, and
allocated overhead. We believe it is important to continue investing in sales
and marketing to continue to generate revenue growth, and we expect sales and
marketing expenses to increase in absolute dollars and fluctuate as a percentage
of revenue as we continue to support our growth initiatives.

General and Administrative. General and administrative expenses consist
primarily of salary and related expenses, including stock-based compensation,
for management, finance and accounting, legal, information systems and human
resources personnel, professional fees, compliance costs, other corporate
expenses and allocated overhead. We expect that general and administrative
expenses will fluctuate in absolute dollars from period to period but decline as
a percentage of revenue over time.

Research and Development. Research and development expenses consist primarily of
salary and related expenses, including stock-based compensation, for LiveVox
personnel as well as limited outsourced software development resources related
to the identification and development of improvements, and expanded features for
our products, as well as quality assurance, testing, product management and
allocated overhead. Research and development costs are expensed as incurred. We
have not performed research and development for internal-use software that would
meet the qualifications for capitalization. We believe it is important to
continue investing in research and development to continue to expand and improve
our products and generate future revenue growth, and we expect research and
development expenses to increase in absolute dollars and fluctuate as a
percentage of revenue as we continue to support our growth initiatives.


Operating results

Comparison of the three months ended June 30, 2022 and 2021 (in thousands of dollars)

The following tables summarize key components of our results of operations for
the three months ended June 30, 2022 and 2021 (in thousands, except per share
data):

                                                                       Three Months Ended
                                                                      June 30, (unaudited)
                                                                         2022                         2021
Revenue                                                            $       32,987                $     28,913
Cost of revenue                                                            12,548                      21,615
Gross profit                                                               20,439                       7,298
Operating expenses
Sales and marketing expense                                                14,970                      27,685
General and administrative expense                                          7,546                      24,637
Research and development expense                                            8,167                      30,169
Total operating expenses                                                   30,683                      82,491
Loss from operations                                                      (10,244)                    (75,193)
Interest expense, net                                                         744                         941
Change in the fair value of warrant liability                                 (92)                       (375)
Other expense, net                                                            113                          32
Total other expense, net                                                      765                         598
Pre-tax loss                                                              (11,009)                    (75,791)
Provision for (benefit from) income taxes                                    (229)                         52
Net loss                                                           $      (10,780)               $    (75,843)

Net loss per share-basic and diluted                               $        (0.12)               $      (1.08)

Weighted average shares outstanding-basic and diluted                      91,562                      69,945



Revenue

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                                     Three Months Ended
                                    June 30, (unaudited)
                                     2022              2021        $ Change      % Change
                Revenue        $    32,987          $ 28,913      $  4,074         14.1  %



Revenue increased by $4.1 million, or 14.1%, to $33.0 million in the three
months ended June 30, 2022 from $28.9 million in the three months ended June 30,
2021, primarily due to 19.7% growth in contracted revenue driven by the
acquisition of new customers and upsells to our existing customer base,
partially offset by a reduction in usage driven by several variables as
discussed above.

Cost of revenue

                                        Three Months Ended
                                       June 30, (unaudited)
                                       2022            2021         $ Change      % Change
              Cost of revenue      $   12,548       $ 21,615       $ (9,067)       (41.9) %
              % of revenue               38.0  %        74.8  %



Cost of revenue decreased by $9.1 million, or 41.9%, to $12.5 million in the
three months ended June 30, 2022 from $21.6 million in the three months ended
June 30, 2021. The decrease was attributable primarily to decrease in personnel
costs of $9.5 million, of which $9.6 million was associated with our Value
Creation Incentive Plan ("VCIP") and Option-based Incentive Plan ("OBIP") awards
that fully vested and were recorded as compensation expense upon a liquidity
event (i.e., the Merger) in the second quarter of fiscal 2021. The decrease in
personnel costs were partially offset by increase in stock-based compensation
expenses of $0.4 million associated with restricted stock units ("RSUs") and
performance-based restricted stock units ("PSUs") granted under the 2021 Equity
Incentive Plan (the "2021 Plan") since the third quarter of fiscal 2021 after
the Merger.

Gross profit

                                             Three Months Ended
                                            June 30, (unaudited)
                                             2022            2021        $ Change      % Change
          Gross profit                  $    20,439       $ 7,298       $ 13,141        180.1  %
          Gross margin percentage              62.0  %       25.2  %



Gross profit increased by $13.2 million, or 180.1%, to $20.5 million in the
three months ended June 30, 2022 from $7.3 million in the three months ended
June 30, 2021. The increase in gross profit was a result of increased revenue of
$4.1 million and decreased personnel costs of $9.5 million related to VCIP and
OBIP awards, which were partially offset by increased stock-based compensation
expenses of $0.4 million related to RSUs and PSUs, described above.

Sales and marketing expense

                                              Three Months Ended
                                             June 30, (unaudited)
                                             2022            2021         $ Change       % Change

Sales and marketing expenses $14,970 $27,685 ($12,715) (45.9)%

        % of revenue                           45.4  %        95.8  %



Sales and marketing expense decreased by $12.7 million, or 45.9%, to $15.0
million in the three months ended June 30, 2022 from $27.7 million in the three
months ended June 30, 2021. The decrease was attributable primarily to decrease
in personnel costs of $15.7 million, of which $18.0 million was associated with
our VCIP and OBIP awards that fully vested and were recorded as compensation
expense upon a liquidity event (i.e., the Merger) in the second quarter of
fiscal 2021. The decrease in personnel costs were partially offset by increase
in marketing, promotions and tradeshows expenses of $1.0 million, increase in
stock-based
                                       44
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compensation expenses of $0.8 million associated with the RSUs and PSUs granted
under the 2021 Plan since the third quarter of fiscal 2021, increase in travel
costs of $0.5 million, and increase in miscellaneous sales and marketing
expenses of $0.5 million.

General and administrative costs

                                                  Three Months Ended
                                                 June 30, (unaudited)
                                                 2022            2021       

$ Change % Change

General and administrative costs $7,546 $24,637

 $ (17,091)       (69.4) %
   % of revenue                                    22.9  %        85.2  %




General and administrative expense decreased by $17.1 million, or 69.4%, to $7.5
million in the three months ended June 30, 2022 from $24.6 million in the three
months ended June 30, 2021. The decrease was attributable primarily to decrease
in personnel costs of $18.2 million, of which $18.3 million was associated with
our VCIP and OBIP awards that fully vested and were recorded as compensation
expense upon a liquidity event (i.e., the Merger) in the second quarter of
fiscal 2021. The decrease in personnel costs were partially offset by increase
in stock-based compensation expenses of $0.9 million associated with RSUs and
PSUs granted under the 2021 Plan since the third quarter of fiscal 2021.

Research and development costs

                                                 Three Months Ended
                                                June 30, (unaudited)
                                                2022            2021        

$ Change % Change

     Research and development expense       $    8,167       $ 30,169       $ (22,002)       (72.9) %
     % of revenue                                 24.8  %       104.3  %



Research and development expense decreased by $22.0 million, or 72.9%, to $8.2
million in the three months ended June 30, 2022 from $30.2 million in the three
months ended June 30, 2021. The decrease was attributable primarily to decrease
in personnel costs of $23.0 million, of which $23.4 million was associated with
our VCIP and OBIP awards that fully vested and were recorded as compensation
expense upon a liquidity event (i.e., the Merger) in the second quarter of
fiscal 2021. The decrease in personnel costs were partially offset by increase
in stock-based compensation expenses of $1.2 million associated with the RSUs
and PSUs granted under the 2021 Plan since the third quarter of fiscal 2021.

Interest expense, net

                                          Three Months Ended
                                         June 30, (unaudited)
                                       2022                   2021       $ Change       % Change
        Interest expense, net      $     744                $ 941       $    (197)       (20.9) %
        % of revenue                     2.3   %              3.3  %



Interest expense, net decreased by $0.2 million, or 20.9%, to $0.7 million in
the three months ended June 30, 2022 from $0.9 million in the three months ended
June 30, 2021. The decrease was attributable primarily to increase in interest
income of $0.2 million associated with the marketable securities which we
invested since the fourth quarter of fiscal 2021.

Change in fair value of warrant liability

                                       45
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                                                    Three Months Ended
                                                   June 30, (unaudited)
                                                  2022                2021             $ Change               % Change
Change in the fair value of warrant
liability                                    $      (92)          $    (375)         $      283                    (75.5) %
% of revenue                                       (0.3)  %            (1.3) %



Gain recognized due to change in the fair value of warrant liability decreased
by $0.3 million, or 75.5%. The decrease was attributable primarily to decrease
in fair value of Forward Purchase Warrants of $0.1 million in the three months
ended June 30, 2022 compared to decrease in fair value of $0.4 million in the
three months ended June 30, 2021. For more information, see Note 19 of the
Company's consolidated financial statements included in Part I, Item 1 of this
Quarterly Report.


Comparison of the six months ended June 30, 2022 and 2021

The following tables summarize key components of our results of operations for
the six months ended June 30, 2022 and 2021 (in thousands, except per share
data):

                                                                    Six Months Ended June 30,
                                                                           (unaudited)
                                                                          2022                          2021
Revenue                                                            $         65,080                $     56,858
Cost of revenue                                                              26,180                      32,795
Gross profit                                                                 38,900                      24,063
Operating expenses
Sales and marketing expense                                                  29,622                      36,593
General and administrative expense                                           15,014                      29,517
Research and development expense                                             16,657                      36,349
Total operating expenses                                                     61,293                     102,459
Loss from operations                                                        (22,393)                    (78,396)
Interest expense, net                                                         1,494                       1,885
Change in the fair value of warrant liability                                  (484)                       (375)
Other expense, net                                                               49                          25
Total other expense, net                                                      1,059                       1,535
Pre-tax loss                                                                (23,452)                    (79,931)
Provision for income taxes                                                      315                          87
Net loss                                                           $        (23,767)               $    (80,018)

Net loss per share-basic and diluted                               $          (0.26)               $      (1.17)

Weighted average shares outstanding-basic and diluted                        91,520                      68,291



Revenue

                            Six Months Ended June 30, (unaudited)
                                     2022                           2021        $ Change      % Change
   Revenue        $             65,080                           $ 56,858      $  8,222         14.5  %



Revenue increased by $8.2 million, or 14.5%, to $65.1 million in the six months
ended June 30, 2022 from $56.9 million in the six months ended June 30, 2021,
primarily due to 20.5% growth in contracted revenue driven by the acquisition of
new customers and upsells to our existing customer base, partially offset by a
reduction in usage driven by several variables as discussed above.


Revenue cost

                                       46
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                                                      Six Months Ended June 30,
                                                             (unaudited)
                                                       2022                 2021             $ Change              % Change
Cost of revenue                                  $    26,180            $  32,795          $  (6,615)                   (20.2) %
% of revenue                                            40.2    %            57.7  %



Cost of revenue decreased by $6.6 million, or 20.2%, to $26.2 million in the six
months ended June 30, 2022 from $32.8 million in the six months ended June 30,
2021. The decrease was attributable primarily to decrease in personnel costs of
$9.0 million, of which $9.7 million was associated with our VCIP and OBIP awards
that fully vested and were recorded as compensation expense upon a liquidity
event (i.e., the Merger) in the second quarter of fiscal 2021. The decrease in
personnel costs were partially offset by increase in cloud data center costs of
$1.6 million while we continue to build out new virtual production instances to
migrate customers from our co-location deployment. With the transition to the
cloud complete in late 2021, going forward, we expect continued benefit from
reduced technical debt (i.e., a concept in software development that reflects
the implied cost of additional rework caused by choosing an easy solution now
instead of using a better approach that would take longer), increased
development efficiency and significantly reduced capital expenditure needs.
Stock-based compensation expenses increased by $0.7 million associated with RSUs
and PSUs granted under the 2021 Plan since the third quarter of fiscal 2021.


Gross profit

                                                      Six Months Ended June 30,
                                                             (unaudited)
                                                       2022                 2021             $ Change              % Change
Gross profit                                     $    38,900            $  24,063          $  14,837                     61.7  %
Gross margin percentage                                 59.8    %            42.3  %



Gross profit increased by $14.8 million, or 61.7%, to $38.9 million in the six
months ended June 30, 2022 from $24.1 million in the six months ended June 30,
2021. The increase in gross profit was a result of increased revenue of $8.2
million and decreased personnel costs of $9.0 million related to VCIP and OBIP
awards, which were partially offset by increased cloud data center costs of $1.6
million and increased stock-based compensation expenses of $0.7 million related
to RSUs and PSUs, described above.


Sales and marketing expense

                                                  Six Months Ended June 30,
                                                         (unaudited)
                                                   2022                 2021             $ Change              % Change
Sales and marketing expense                  $    29,622            $  36,593          $  (6,971)                   (19.1) %
% of revenue                                        45.5    %            64.4  %



Sales and marketing expense decreased by $7.0 million, or 19.1%, to $29.6
million in the six months ended June 30, 2022 from $36.6 million in the six
months ended June 30, 2021. The decrease was attributable primarily to decrease
in personnel costs of $12.3 million, of which $18.1 million was associated with
our VCIP and OBIP awards that fully vested and were recorded as compensation
expense upon a liquidity event (i.e., the Merger) in the second quarter of
fiscal 2021. The decrease in personnel costs were partially offset by increase
in marketing, promotions and tradeshow expenses of $1.7 million, increase in
stock-based compensation expenses of $1.4 million associated with the RSUs and
PSUs granted under the 2021 Plan since the third quarter of fiscal 2021,
increase in travel expenses of $1.3 million as travel restrictions related to
the COVID-19 pandemic continued to ease, and increase in miscellaneous sales and
marketing expenses of $0.4 million.


                                       47
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General and administrative costs

                                                      Six Months Ended June 30,
                                                             (unaudited)
                                                       2022                 2021             $ Change              % Change
General and administrative expense               $    15,014            $  29,517          $ (14,503)                   (49.1) %
% of revenue                                            23.1    %            51.9  %




General and administrative expense decreased by $14.5 million, or 49.1%, to
$15.0 million in the six months ended June 30, 2022 from $29.5 million in the
six months ended June 30, 2021. The decrease was attributable primarily to
decrease in personnel costs of $17.4 million, of which $18.4 million was
associated with our VCIP and OBIP awards that fully vested and were recorded as
compensation expense upon a liquidity event (i.e., the Merger) in the second
quarter of fiscal 2021. The decrease in personnel costs were partially offset by
increase in stock-based compensation expenses of $1.5 million associated with
the RSUs and PSUs granted under the 2021 Plan since the third quarter of fiscal
2021, increase in miscellaneous general and administrative expenses of $0.9
million primarily attributable to directors' and officers' insurance, increase
in software expenses of $0.3 million and increase in office space and utilities
expenses of $0.3 million.


Research and development costs

                                                    Six Months Ended June 30,
                                                           (unaudited)
                                                     2022                 2021             $ Change              % Change
Research and development expense               $    16,657            $  36,349          $ (19,692)                   (54.2) %
% of revenue                                          25.6    %            63.9  %



Research and development expense decreased by $19.7 million, or 54.2%, to $16.7
million in the six months ended June 30, 2022 from $36.3 million in the six
months ended June 30, 2021. The decrease was attributable primarily to decrease
in personnel costs of $21.9 million, of which $23.5 million was associated with
our VCIP and OBIP awards that fully vested and were recorded as compensation
expense upon a liquidity event (i.e., the Merger) in the second quarter of
fiscal 2021. The decrease in personnel costs were partially offset by increase
in stock-based compensation expenses of $2.1 million associated with the RSUs
and PSUs granted under the 2021 Plan since the third quarter of fiscal 2021.


Interest expense, net

                                                          Six Months Ended June 30,
                                                                 (unaudited)
                                                           2022                 2021             $ Change               % Change
Interest expense, net                                $     1,494            $   1,885          $     (391)                   (20.7) %
% of revenue                                                 2.3    %             3.3  %



Interest expense, net decreased by $0.4 million, or 20.7%, to $1.5 million in
the six months ended June 30, 2022 from $1.9 million in the six months ended
June 30, 2021. The decrease was attributable primarily to increased interest
income of $0.4 million associated with the marketable securities which we
invested since the fourth quarter of fiscal 2021.


Change in fair value of warrant liability

                                       48
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                                                  Six Months Ended June 30,
                                                         (unaudited)
                                                   2022                 2021             $ Change               % Change
Change in the fair value of warrant
liability                                    $      (484)           $    (375)         $     (109)                    29.1  %
% of revenue                                        (0.7)   %            (0.7) %



Gain recognized due to change in the fair value of warrant liability increased
by $0.1 million, or 29.1%. The increase was attributable primarily to decrease
in fair value of Forward Purchase Warrants of $0.5 million in the six months
ended June 30, 2022 compared to decrease in fair value of $0.4 million in the
six months ended June 30, 2021. For more information, see Note 19 of the
Company's consolidated financial statements included in Part I, Item 1 of this
Quarterly Report.


Cash and capital resources

Sources of cash

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 and the settlement of liabilities and commitments in the
normal course of business. The Company's main sources of liquidity are cash
generated by operating cash flows and debt. For the six months ended June 30,
2022 and 2021, the Company's cash flow used in operating activities was $16.4
million and $9.6 million, respectively.

As of June 30, 2022 and December 31, 2021, the Company held cash and cash
equivalents of $29.9 million and $47.2 million, respectively. In addition, the
Company had restricted cash of $0.1 million as of both June 30, 2022 and
December 31, 2021, related to the holdback amount for an acquisition the Company
made in 2019. The Company also held marketable securities of $47.2 million and
$49.4 million as of June 30, 2022 and December 31, 2021, respectively.

The term loan and revolving credit facility that the Company entered into with
PNC Bank, as amended (the "Credit Facility"), provides for a $57.6 million term
loan, a $5.0 million line of credit and a $1.5 million letter of credit
sub-facility. The Credit Facility is collateralized by a first-priority
perfected security interest in substantially all the assets of the Company and
is subject to certain financial covenants before and after a covenant conversion
date. Covenant conversion may be elected early by the Company if certain
criteria are met, including, but not limited to, meeting fixed charge coverage
and liquidity ratio targets as of the most recent twelve-month period. Prior to
the covenant conversion date, the Company is required to maintain minimum levels
of liquidity and recurring revenue. As of the covenant conversion date, the
Company is required to maintain the Fixed Charge Coverage Ratio and Leverage
Ratio (as defined in the Credit Facility) measured on a quarter-end basis for
the four-quarter period ending on each such date through the end of the
agreement. The term loan is due December 31, 2025. The Company was in compliance
with all debt covenants at June 30, 2022 and December 31, 2021 and was in
compliance with all debt covenants as of the date of issuance of these
consolidated financial statements. There was no unused borrowing capacity under
the term loan portion of the Credit Facility at June 30, 2022 or December 31,
2021. There were no amounts outstanding under the revolving portion of the
Credit Facility as of June 30, 2022 or December 31, 2021.


Cash needs

LiveVox's cash requirements within the next 12 months consist primarily of
operating and administrative activities including employee related expenses and
general, operating and overhead expenses, current maturities of the Company's
term loan, operating and finance leases and other obligations.

by LiveVox long-term cash requirements consist of various contractual obligations and commitments, including:

•Term loan - The Company has contractual obligations under its term loan to make
principal and interest payments. Please see Note 9 to the Company's consolidated
financial statements included in Part I, Item 1 of this Quarterly Report for a
discussion of the contractual obligations under the Company's term loan and the
timing of principal maturities. The principal amount is due December 31, 2025;

•Operating and finance lease obligations - The Company leases its corporate
headquarters and worldwide offices under operating leases, and finance computer
and networking equipment and software purchases for its co-location data centers
under finance leases. Please see Note 8 to the Company's consolidated financial
statements included in Part I, Item 1 of this Quarterly Report for further
detail of the Company's obligations under operating and finance leases and the
timing of expected future lease payments;

•Other liabilities - These include other long-term liabilities reflected in the
Company's consolidated balance sheets as of June 30, 2022, including obligations
associated with certain employee and non-employee incentive plans, Forward
                                       49
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Warrants, unrecognized tax benefits and various long-term liabilities, which have some inherent uncertainty as to the timing of such payments.

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
and the COVID-19 pandemic continues to depend on future developments that cannot
be accurately predicted at this time. 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 the cash generated by operating cash flows and debt will be
sufficient to meet the Company's anticipated cash requirements for at least the
next 12 months from the date of this Quarterly Report and beyond, while
maintaining sufficient liquidity for normal operating purposes.


Acquisition Opportunities

The Company believes that there may be opportunity for further consolidation in
LiveVox's industry. From time to time, the Company evaluates potential strategic
opportunities, including acquisitions of other providers of cloud-based
services. The Company has been in, and from time to time may engage in,
discussions with counterparties in respect of various potential strategic
acquisition and investment transactions. Some of these transactions could be
material to the Company's business and, if completed, could require significant
commitments of capital, result in increased leverage or dilution and/or subject
the Company to unexpected liabilities. In connection with evaluating potential
strategic acquisition and investment transactions, the Company may incur
significant expenses for the evaluation and due diligence investigation of these
potential transactions.


Comparison of cash flows for the six months ended June 30, 2022 and 2021

The following table summarizes the main components of our cash flows for the six months ended June 30, 2022 and 2021 (in thousands of dollars):

                                                             Six Months 

Ended June 30th(unaudited)

                                                                  2022                   2021
Net cash used in operating activities                       $      (16,418)         $     (9,649)
Net cash provided by (used in) investing activities                    (82)                  722
Net cash provided by (used in) financing activities                   (610)              150,933
Effect of foreign currency translation                                (234)                  (49)
Net increase (decrease) in cash, cash equivalents and
restricted cash                                             $      (17,344)         $    141,957


Net cash used in operating activities

Cash flows used in operating activities in the six months ended June 30, 2022
increased by $6.8 million to $16.4 million from $9.6 million during the same
period in fiscal 2021. The increase to net cash used in operating activities was
primarily attributable to a decrease of $62.4 million in non-cash adjustments to
net loss, partially offset by a $56.3 million decrease to net loss. The decrease
in non-cash items was primarily attributable to the compensation expense of
$68.7 million recorded in the second quarter of fiscal 2021 associated with the
VCIP and OBIP awards fully vested in connection with the Merger, partially
offset by a $5.6 million increase of stock-based compensation expense associated
with the RSUs and PSUs granted under the 2021 Plan since the third quarter of
fiscal 2021. Net cash used in operating activities also included a decrease of
$0.6 million in cash from operating assets and liabilities, primarily due to the
timing of cash payments to vendors and cash receipts from customers.

Net cash provided by (used in) investing activities

Cash flows from investing activities in the six months ended June 30, 2022
decreased by $0.8 million to cash outflows of $0.1 million from cash inflows of
$0.7 million during the same period in fiscal 2021. Net cash used in investing
activities during the six months ended June 30, 2022 was comprised of the
purchases of debt securities of $5.4 million and the purchases of property and
equipment of $0.8 million, partially offset by proceeds from sale of debt
securities of $3.5 million and proceeds from maturities and principal paydowns
of debt securities of $2.7 million.

Net cash provided by (used in) financing activities

                                       50
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Cash flows from financing activities in the six months ended June 30, 2022
decreased by $151.5 million to cash outflows of $0.6 million from cash inflows
of $150.9 million during the same period in fiscal 2021. The decrease to net
cash from financing activities was primarily attributable to the net cash
proceeds of $157.4 million incurred in the second quarter of fiscal 2021 as a
result of the Merger, partially offset by the repayment of drawdown on the
revolving Credit Facility of $4.7 million made in the second quarter of fiscal
2021.


Critical Accounting Estimates

Management's discussion and analysis of our financial condition and results of
operations is based on our consolidated financial statements included in Part I,
Item 1 of this Quarterly Report, which have been prepared in accordance with
U.S. GAAP.

The preparation of these consolidated financial statements 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. 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 doubtful accounts, 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. Management periodically evaluates such estimates and they are
adjusted prospectively based upon such periodic evaluation. 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.

While our significant accounting policies are more fully described in the notes
to the consolidated financial statements included in Part I, Item 1 of this
Quarterly Report, we believe that the following accounting estimates are
critical to our business operations and understanding of our financial results.
We consider an accounting judgment, estimate or assumption to be critical when
(a) the estimate or assumption is complex in nature or requires a high degree of
subjectivity and judgment and (b) the use of different judgments, estimates and
assumptions could have a material impact on our consolidated financial
statements.

Impairment of long-lived assets, including intangible 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. No impairment losses have been recognized in any of the periods
presented.

We perform our 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 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. No impairment
losses have been recognized in any of the periods presented.

Intangible assets, consisting of acquired developed technology, corporate name,
customer relationships and workforce, are reviewed for impairment whenever
events or changes in circumstances indicate an asset's carrying value may not be
recoverable. No impairment losses have been recognized in any of the periods
presented.

Impairment of marketable securities

The Company evaluates the amortized cost of debt securities compared to their
fair value to determine whether a debt security is impaired and whether an
impaired debt security is other-than-temporary impaired ("OTTI") at each
reporting period. Factors considered in determining whether an OTTI occurs
include the length of time and extent to which fair value has been less than the
cost basis, credit quality of the issuer and the Company's ability and intent to
hold the investment for a period of time sufficient to allow for any anticipated
recovery in market value. For a debt security deemed to be OTTI, the value of
the debt security is reduced, the credit related component of OTTI is recorded
in earnings and the noncredit related component is charged to other
comprehensive income (loss) in the consolidated statements of operations and
comprehensive loss.

To June 30, 2022 and December 31, 2021the Company determined that the unrealized losses were temporary in nature and did not consider the debt securities to be OTTI.

Revenue recognition

The Company recognizes revenue in accordance with WE GAAP, in accordance with ASC 606, Revenue from contracts with customers.

                                       51
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The Company derives substantially all of its revenue by providing cloud-based
contact center products under a usage-based model. The Company's performance
obligations are satisfied over time as the customer has continuous access to its
hosted technology platform solutions through one of its data centers and
simultaneously receives and consumes the benefits and the Company performs its
services. 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. Professional services,
which represents approximately 1% of revenue, are billed on a fixed-price or on
a time and material basis and the revenue is recognized over time as the
services are rendered.

The Company has service-level agreements with customers warranting defined
levels of uptime reliability and performance. 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 (e.g., including various
combinations of services), 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, the Company determines the
SSP using information that generally includes market conditions or other
observable inputs.

Income 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.

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.

Judgment is required in assessing the future tax consequences of events that
have been recognized in our consolidated financial statements or tax returns.
Variations in the actual outcome of these future tax consequences could
materially impact our consolidated financial statements.

Stock-based compensation

Management incentive units

During 2019, LiveVox TopCo, LLC ("LiveVox TopCo"), the sole stockholder of the
Company prior to the Merger, 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 of LiveVox TopCo 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 in the LiveVox TopCo limited liability company
agreement. The Company recognizes stock-based compensation expense on a
straight-line basis over the requisite service period of five years, reduced for
actual forfeited MIUs. Stock-based compensation expense for MIUs is measured
based on the grant date fair value of the award using a Monte Carlo simulation.
Assumptions used in the Monte Carlo simulation are holding period, expected
share price volatility, discount for lack of marketability, and risk-free
interest rate.

2021 Stock Incentive Plan

On June 16, 2021, the stockholders of the Company approved the 2021 Equity
Incentive Plan (the "2021 Plan"), which became effective upon the closing of the
Merger on June 18, 2021. The Company grants RSUs and PSUs to employees,
executives, directors, and eligible consultants of the Company. RSUs are subject
only to service conditions and typically vest over periods ranging from three to
six years based on the grantee's role in the Company. PSUs are granted to
certain key employees and vest either based on the achievement of predetermined
market conditions, or based on both service and market conditions. All RSUs and
PSUs will be settled in shares of Class A common stock and are classified as
equity awards. Equity-classified awards are recognized as stock-based
compensation expense over an employee's requisite service period or a
nonemployee's vesting period on the basis of the grant-date
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fair value. Generally, the Company recognizes stock-based compensation expense
of RSUs using the straight-line method, and recognizes stock-based compensation
expense of PSUs subject to graded market vesting on a tranche-by-tranche basis
(i.e., the accelerated attribution method). The fair value of the RSUs is
estimated by using the closing price of the Company's Class A common stock on
Nasdaq on the measurement date. The fair value of the PSUs at each measurement
date is estimated by using a Monte Carlo simulation. The key inputs used in the
Monte Carlo simulation are stock price, expected share price volatility,
expected life, risk-free interest rate, and vesting hurdles. While the Company
believes that the assumptions used in these calculations are reasonable,
differences in actual experience or changes in assumptions could materially
affect the expense related to the Company's 2021 Plan.

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.

If an acquisition is determined to be a business combination, the assets
acquired and liabilities assumed are recorded at their respective estimated fair
values at the date of the acquisition. Any excess of the purchase price over the
estimated fair values of the identifiable net assets acquired is recorded as
goodwill.

If an acquisition is determined to be an asset acquisition, the cost of the
asset acquisition, including transaction costs, are allocated to identifiable
assets acquired and liabilities assumed based on a relative fair value basis. If
the cost of the asset acquisition is less than the fair value of the net assets
acquired, no gain is recognized in earnings. The excess fair value of the
acquired net assets acquired over the consideration transferred is allocated on
a relative fair value basis to the identifiable net assets (excluding
non-qualifying assets).

Determining estimated fair value requires a significant amount of judgment and
estimates. If our assumptions change or errors are determined in our
calculations, the fair value could materially change resulting in a change in
our goodwill or identifiable net assets acquired.

Public and term warrants

Immediately following the Merger, the Company assumed 833,333 Forward Purchase
Warrants ("Forward Purchase Warrants") and 12,499,995 public warrants ("Public
Warrants") (collectively "Warrants") that had been previously issued by
Crescent. 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.

Upon consummation of the 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 recorded as
liabilities on the consolidated balance sheets at fair value upon the Merger,
with subsequent changes in the fair value recognized in the consolidated
statements of operations and comprehensive loss at each reporting date. The
Forward Purchase Warrants are classified as Level 3 fair value measurement and
the fair value is measured using a Black-Scholes option pricing model. Inherent
in options pricing models are assumptions related to current stock price,
exercise price, expected share price volatility, expected life, risk-free
interest rate and dividend yield. While the Company believes that the
assumptions used in these calculations are reasonable, changes in assumptions
could materially affect the liabilities related to the Warrants.

Recently Adopted Accounting Pronouncements

See Note 2 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted at the balance sheet date included in this report quarterly.

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