Company: LPSN
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001102993-25-000018
Chunk: 2

Company: LIVEPERSON INC
Filing Date: 2025-03-14
Form: 10-K
Item: Item 8
Chunk 2
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 the embedded features included in the 2029 Notes should be bifurcated as embedded derivatives as a critical audit matter. Determining whether the embedded features included in the 2029 Notes should be bifurcated and accounted for separately as derivatives involved the use of significant judgment in the application of highly complex 

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accounting standards.  Auditing these elements involved especially challenging and complex auditor judgment due to the nature and extent of audit effort required to evaluate management’s application of highly complex accounting standards to these elements. 

The primary procedures we performed to address this critical audit matter included:

•Reading and analyzing the relevant agreements to identify relevant terms and conditions that affect whether embedded features should be bifurcated. 

•With the assistance of professionals in our firm having expertise in accounting for derivatives, we evaluated the Company’s conclusions regarding whether the embedded features should be bifurcated and accounted for as derivatives under accounting principles generally accepted in the United States of America. 

Impairment Testing of Goodwill and Long-Lived Assets

As described in Notes 1, 5 and 6 to the consolidated financial statements, the Company’s consolidated goodwill, intangible assets and property and equipment, net balances as of December 31, 2024 were $222.6 million, $15.1 million and $100.6 million, respectively. Prior to testing goodwill for impairment, the Company first tests its long-lived assets for impairment. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from their use and eventual disposition. If such review indicates that the carrying amount of an asset is not recoverable and the asset's fair value is less than the carrying amount, an impairment charge is recognized. In connection with the annual goodwill impairment completed as of October 2024, using the quantitative “Step 1” assessment, the Company determined the fair value of its reporting unit, using both an income approach and a market approach. The fair value determination using an income approach requires management to make significant estimates and assumptions that related to forecasts of future revenues, earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and the discount rate.  As a result of the impairment tests in the fourth quarter of 2024, the Company recorded non-cash impairment charges of $56.9 million for goodwill and $35.2 million for intangible assets which is included in Impairment of goodwill and Impairment of intangibles and