• Revenue: $74.2 million in Q3, above the high end of guidance range.
• Adjusted EBITDA: $7.3 million, exceeding guidance expectations.
• B2B Hosted Services Revenue: $62.7 million, down 27% year-over-year.
• B2B Core Recurring Revenue: $68.8 million, 93% of total revenue, down 21% year-over-year.
• Professional Services Revenue: $11.6 million, down 26% year-over-year.
• US Revenue: $49.4 million, 67% of total revenue.
• International Revenue: $24.9 million, 33% of total revenue.
• Average Revenue per Customer: $630,000, up 6% year-over-year.
• Net Revenue Retention: 79% in Q3, compared to 83% in Q2.
• Cash on Balance Sheet: $143 million at the end of Q3.
• Full Year Revenue Guidance: $305 million to $310 million.
• Full Year Adjusted EBITDA Guidance: $18 million to $23 million.

• Warning! GuruFocus has detected 7 Warning Signs with LPSN.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• LivePerson Inc (NASDAQ:LPSN) exceeded revenue expectations for the third quarter, reporting $74.2 million, above the high end of their guidance range.
• The company achieved an adjusted EBITDA of $7.3 million, also surpassing the high end of their guidance range.
• LivePerson Inc (NASDAQ:LPSN) unveiled a unified omnichannel solution that integrates digital and voice interactions, enhancing their strategic partnership capabilities.
• The strategic partnership with Avaya has begun translating into bookings and pipeline momentum, including significant new logo wins.
• There is a notable increase in the adoption of their generative AI capabilities, with a 14% sequential increase in clients and a 40% increase in conversations using the AI suite.

Negative Points

• LivePerson Inc (NASDAQ:LPSN) continues to face challenges with customer attrition, expecting significant risk of customer churn in the fourth quarter and the first quarter of 2025.
• Revenue from B2B hosted services declined by 27% year-over-year, primarily due to customer cancellations and downsells.
• Net revenue retention dropped to 79% in the third quarter, down from 83% in the second quarter.
• The company anticipates revenue to decline sequentially through the fourth quarter and into 2025.
• Despite improvements, the company acknowledges that it is still early in their turnaround strategy and more progress is needed to return to profitable growth.

Q & A Highlights

Q: Can you elaborate on the challenges faced in offsetting churn and how it compares to expectations from 90 or 180 days ago? A: John Sabino, CEO: Initially, there was uncertainty about future quarters, but we've refined our health and adoption scoring, providing better insight into risks. Some renewals we hoped to turn around seem unlikely due to past instability. This isn't a material change but a refinement based on better data. We expect to get through most of the risk by the end of Q1 or Q2 next year.

Q: How is the new sales motion progressing relative to expectations? A: John Sabino, CEO: The sales motion is ramping as expected, if not faster. The pricing and packaging changes are reducing deal cycle times and increasing deal sizes. Leadership changes and the Avaya partnership are contributing positively, aligning with our expectations.

Q: What are the main use cases for new logo wins? A: John Collins, CFO and COO: Integration with voice and unified analytics are key themes. For example, logistics companies use our platform for ticketing and case management. In healthcare, we're increasing service rates and adding sales use cases. Generative AI usage is also growing significantly.

Q: Can you discuss the competitors and key value propositions in the seven-figure deals? A: John Sabino, CEO: Our competitor base remains consistent, including unified CCaaS providers and cloud platform players. Our value proposition is offering innovation without disruption, allowing customers to enhance capabilities without a full CCaaS migration. We've successfully competed against Genesys and Salesforce in these deals.

Q: What are the expectations for bookings and churn in 2025? A: John Sabino, CEO: We expect annualized bookings to exceed churn in the second half of 2025. Revenue will decline sequentially but at a slower rate, reaching a growth inflection by the end of 2025. This is driven by improved customer success motion and sales momentum, with double-digit bookings expected in Q4 2024 and Q1 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.