Customer Engagement and AI Solutions - LivePerson powers over one billion conversational interactions each month, enhancing customer engagement and driving revenue growth for brands[16]. - The LivePerson Platform enables agents to manage dozens of messaging conversations simultaneously, achieving labor efficiency gains of at least 200% compared to voice agents[21]. - The company’s AI-driven solutions have been shown to increase customer satisfaction scores by double-digit percentage points and improve sales conversion rates by double-digit percentages[29]. - LivePerson's Conversational AI, developed from billions of interactions, allows for real-time intent recognition and classification, enhancing customer service and marketing automation[36]. - The Conversational Flywheel framework helps brands improve customer engagement by analyzing conversational data and automating responses, leading to increased first-contact resolution rates[32]. - The platform supports billions of conversations across various industries, utilizing machine learning models to enhance conversational understanding and generative AI customization[53]. Market Position and Strategy - The company has established itself as a market leader in AI-enhanced customer interaction, focusing on technological innovation and enterprise-class capabilities[52]. - The company targets key markets including telecommunications, financial services, and healthcare, with a focus on expanding its presence in the U.S., Canada, Latin America, Europe, and APAC[39]. - LivePerson's cloud-based SaaS model offers lower up-front costs and faster implementation, providing significant advantages over traditional on-premise software[22]. - The platform integrates with over 40 APIs, facilitating robust integration into back-end systems and enabling custom program development[18]. - No single customer accounted for or exceeded 10% of total revenue for the years 2024, 2023, or 2022, indicating a diversified customer base[40]. Financial Performance and Risks - The company reported an accumulated deficit of $991.3 million as of December 31, 2024, indicating potential future losses[72]. - The company relies heavily on monthly and interaction-based fees for revenue, which may lead to revenue variability based on customer interactions[76]. - Customer retention is critical, as customers typically subscribe for a twelve-month term and can terminate with 30 to 90 days' notice, impacting revenue if significant customers leave[75]. - The company experiences significant fluctuations in quarterly revenue and operating results, influenced by customer demand and sales cycles[107]. - The sales cycle for the company's products can take several months, particularly for enterprise customers, complicating revenue predictions[98]. - The company has historically seen a disproportionate percentage of sales occur in the last month of each quarter, increasing revenue prediction uncertainty[99]. Technology and Infrastructure - The company is migrating its technology infrastructure to the public cloud, enhancing scalability and service quality[56]. - The transition to a public cloud infrastructure is underway, but it poses risks such as service interruptions, data loss, and increased costs, which could negatively impact operations[91]. - The company is investing in infrastructure, research and development, and customer support to scale operations, which will increase the cost base and may affect future profitability[78]. Competition and Market Challenges - The company faces competition from various technology providers, including eGain, Genesys, and Salesforce.com, which could impact market share[58]. - The competitive landscape for mobile and online business messaging is intensifying, with significant pressure from existing competitors and new entrants[123]. - Economic downturns in key industries such as telecommunications and financial services could adversely affect the company's business and financial condition[129]. Regulatory and Compliance Risks - The company is subject to various regulatory risks, including privacy and data protection laws, which could adversely affect its business operations[9]. - The company must comply with evolving U.S. and international privacy laws, which could increase operational complexity and costs, potentially leading to legal proceedings[162]. - The company is subject to the E.U. GDPR, which imposes fines up to €20 million or 4% of global annual revenue for noncompliance[163]. - The company faces potential penalties and operational impacts due to evolving U.S. state privacy laws, with comprehensive laws expected to be enacted between 2024 and 2026[168]. - Regulatory scrutiny of AI is increasing, which may necessitate modifications to AI-driven functionalities in the company's products and services[178]. Cybersecurity and Data Protection - The company is dependent on maintaining the security of its systems and those of third-party providers, with potential risks from cyber-attacks and data breaches[134]. - The transition to a remote workforce post-COVID-19 may increase cybersecurity risks, particularly from countries with higher rates of cybercrime[137]. - The company’s insurance coverage for cybersecurity risks may be insufficient to cover all losses from potential breaches[143]. - Security vulnerabilities and failures in service reliability could lead to significant legal and financial exposure, damaging the company's reputation[138]. Intellectual Property and Innovation - The company has a portfolio of patents and regularly files applications to protect its intellectual property, which is crucial for its business strategy[205]. - The company is investing in AI technologies, which are expected to grow, but faces challenges related to data quality and ethical implications[210]. - The evolving regulatory landscape regarding AI may increase operational costs and compliance risks, potentially affecting the adoption of AI solutions[211]. Legal and Operational Liabilities - Ongoing actions and potential legal liabilities could materially affect the company's financial condition and operational results[9]. - Legal liabilities may arise from the services provided through the company's technology platforms, which could result in negative publicity and significant defense costs[213]. - The company faces risks related to the technological capabilities of its services, including potential system failures and degraded response times due to increased customer interactions[154].

Financial Data and Key Metrics Changes - Revenue for Q4 2024 was $73.2 million, exceeding the high end of guidance, with full-year revenue at $312.5 million, also above guidance [19][20][46] - Adjusted EBITDA for Q4 was $8.1 million, above guidance, with full-year adjusted EBITDA at $24.1 million [19][20][46] - Recurring revenue constituted 94% of total revenue, with average revenue per customer increasing by 2% year-over-year to $625,000 [48][52] Business Line Data and Key Metrics Changes - Revenue from hosted services was $60.2 million, down 23% year-over-year, while professional services revenue was $13 million, also down 23% year-over-year [46][47] - Net revenue retention improved to 82% in Q4, up from 79% in Q3, driven by favorable timing of deals [49] Market Data and Key Metrics Changes - U.S. revenue was $48.4 million, representing 66% of total revenue, while international revenue was $24.8 million, making up 34% [48] - The company signed 39 deals in Q4, including 9 new logos and 30 expansions and renewals, with total deal value increasing by 18% quarter-over-quarter [43][44] Company Strategy and Development Direction - The company is focusing on three core pillars: enhancing go-to-market capabilities, innovating product offerings, and strengthening capital structure [10][13] - LivePerson aims to leverage AI-driven solutions to transform customer engagement from reactive to proactive, integrating AI automation throughout the customer journey [18][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the groundwork laid in 2024, positioning the company for sustainable and profitable growth despite anticipated challenges in the first half of 2025 [19][40] - The company expects to see positive net new ARR in the second half of 2025 as it moves past the legacy renewal cycle [40][50] Other Important Information - The company has made significant advancements in AI capabilities, with a 17% sequential increase in customers using generative AI and a 37% increase in conversations utilizing the AI suite [28][31] - The partnership with Lynrock Lake has significantly enhanced the company's capital structure [13][50] Q&A Session Summary Question: Clarification on partner attach target for 2025 - The target is for 35% of total bookings value to be driven by partners, with steady improvement expected from previous years [60] Question: Insights on Avaya integration and partnerships with Cisco and Amazon - The Avaya partnership is progressing well, with a significant deal closed and more in the pipeline, while partnerships with Cisco and Amazon are aimed at expanding market reach [65][67] Question: Incremental spend on sales and marketing - There is no incremental investment relative to 2024; instead, the focus is on maintaining spending in sales and marketing while reducing costs in other areas [72] Question: Updates on debt situation and strategy - No updates or changes to the debt strategy were provided, but developments are expected as the year progresses [75] Question: Sustainability of gross margin increase - The increase in gross margin is influenced by reduced consulting costs and labor, but some pressure is expected in 2025 due to cloud migration costs [78][79] Question: Customer attrition and renewal cycle - The legacy renewal cycle is expected to end in the first half of 2025, with most customer losses occurring in Q1 [82] Question: System overhaul implications for customers - The company allows customers to retain existing contact center infrastructure while integrating best-in-class digital solutions [86]

LivePerson, Inc. (NASDAQ:LPSN) Q4 2024 Earnings Conference Call March 5, 2025 5:00 PM ET Company Participants Jon Perachio - Senior Director, Investor Relations John Sabino - Chief Executive Officer John Collins - Chief Financial Officer and Chief Operating Officer Conference Call Participants Jeff Van Rhee - Craig-Hallum Capital Group Mike Latimore - Northland Capital Markets Operator Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's Fourth Quarter 2024 Earnings Confe ...

Core Viewpoint - LivePerson reported break-even quarterly earnings per share, surprising analysts who expected a loss, indicating a potential turnaround for the company [1][2] Financial Performance - The company achieved revenues of $73.21 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 7.18%, but down from $95.47 million year-over-year [2] - Over the last four quarters, LivePerson has surpassed consensus revenue estimates four times, but only once for EPS estimates [2] Stock Performance - LivePerson shares have declined approximately 30.9% since the beginning of the year, contrasting with the S&P 500's decline of 1.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it is expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.05 on revenues of $66.92 million, and for the current fiscal year, it is -$0.19 on revenues of $258.13 million [7] - The trend of earnings estimate revisions is mixed, which could change following the recent earnings report [6] Industry Context - The Internet - Services industry, to which LivePerson belongs, is currently ranked in the top 34% of over 250 Zacks industries, indicating a favorable environment for potential growth [8]

Core Insights - LivePerson reported total revenue of $73.2 million for Q4 2024, a decrease of 23.3% year-over-year due to customer cancellations and downsells [2][6] - The company signed 39 deals in total during the fourth quarter, including 30 expansions and renewals, and 9 new customers [3][6] - Adjusted EBITDA for Q4 2024 was $8.1 million, an increase from $3.7 million in Q4 2023 [7] Financial Performance - Net loss for Q4 2024 was $112.1 million, or $1.27 per share, compared to a net loss of $40.5 million, or $0.48 per share, in Q4 2023 [6][26] - Adjusted operating income for Q4 2024 was $1.0 million, compared to an adjusted operating loss of $4.0 million in Q4 2023 [6] - Cash and cash equivalents at the end of Q4 2024 were $183.2 million, down from $210.8 million at the end of Q4 2023 [9] Strategic Developments - The CEO highlighted 2024 as a transformative year for LivePerson, emphasizing progress in go-to-market capabilities and product innovation [4] - The CFO noted increasing demand for AI agents and orchestration, indicating a positive trend for the company in 2025 [5] - The company expects total revenue for Q1 2025 to range from $63 million to $65 million, representing a year-over-year decline of 24% to 26% [11] Revenue Breakdown - For Q4 2024, hosted services revenue was $60.2 million, down from $78.6 million in Q4 2023, while professional services revenue was $12.99 million, down from $16.87 million [13] - For the full year 2024, total revenue was $312.5 million, compared to $402.0 million in 2023 [26] Future Guidance - For the full year 2025, total revenue is expected to range from $240 million to $255 million, reflecting a year-over-year decline of 18% to 23% [12] - Adjusted EBITDA for the full year 2025 is projected to range from $(14) million to $0 million [12]

Financial Performance - Total revenue for Q4 2024 was $73.2 million, a decrease of 23.3% compared to the same period last year[3]. - Revenue for Q4 2024 was $73,206,000, a decrease of 23.3% compared to $95,468,000 in Q4 2023[31]. - Total revenue for the year ended December 31, 2024, was $312,474,000, down 22.2% from $401,983,000 in 2023[31]. - For Q1 2025, total revenue is expected to range from $63 million to $65 million, representing a year-over-year decline of 24% to 26%[12]. - For the full year 2025, total revenue is expected to range from $240 million to $255 million, a decline of 18% to 23% year-over-year[13]. Net Loss and Earnings - Net loss for Q4 2024 was $112.1 million, or $1.27 per share, compared to a net loss of $40.5 million, or $0.48 per share, in Q4 2023[8]. - Net loss for Q4 2024 was $112,128,000, compared to a net loss of $40,525,000 in Q4 2023, representing an increase in loss of 176.5%[31]. - GAAP net loss for Q4 2024 was $112.1 million, compared to a loss of $40.5 million in Q4 2023, representing an increase of 176%[36]. Adjusted EBITDA - Adjusted EBITDA for Q4 2024 was $8.1 million, up from $3.7 million in Q4 2023[9]. - Adjusted EBITDA for Q4 2024 was $8.1 million, up from $3.7 million in Q4 2023, indicating a growth of 118%[36]. - The company anticipates adjusted EBITDA for the full year 2025 to range from $(14) million to $0 million[15]. Cash and Liquidity - Cash balance at December 31, 2024, was $183.2 million, down from $210.8 million at the end of 2023[10]. - Cash, cash equivalents, and restricted cash at the end of 2024 were $183,237,000, down from $212,925,000 at the end of 2023, reflecting a decrease of 13.9%[34]. - Cash and cash equivalents decreased to $183.2 million in Q4 2024 from $210.8 million in Q4 2023, a decline of 13%[44]. - Total Free Cash Flow for the year ended December 31, 2024, was $(40.3) million, an improvement from $(48.4) million in 2023[41]. Costs and Expenses - The total costs, expenses, and other for Q4 2024 were $174,200,000, an increase of 28% from $136,137,000 in Q4 2023[31]. - Interest expense for the year ended December 31, 2024, was $14,486,000, significantly higher than $4,882,000 in 2023[31]. - Interest expense increased to $6.3 million in Q4 2024 from $0.8 million in Q4 2023[42]. - The company incurred restructuring costs of $3,263,000 in Q4 2024, down from $6,665,000 in Q4 2023[31]. - The company incurred restructuring costs of $3.3 million in Q4 2024, down from $6.7 million in Q4 2023[36]. Impairment and Goodwill - The company reported an impairment of goodwill amounting to $56,924,000 in Q4 2024, compared to no impairment in Q4 2023[31]. - The company reported impairment of goodwill amounting to $56.9 million for Q4 2024, compared to no impairment in Q4 2023[36]. Business Development - The company signed 39 deals in total for Q4 2024, including 30 expansions and renewals, and 9 new customers[4]. - Average revenue per enterprise and mid-market customer (ARPC) increased by 2.5% to $625,000 for Q4 2024[4]. - The company has seen increasing demand for AI agents and AI orchestration, indicating a positive trend for future growth[6]. Assets and Liabilities - Total assets decreased to $607.8 million in Q4 2024 from $835.5 million in Q4 2023, a reduction of 27%[44]. - Total liabilities decreased to $675.1 million in Q4 2024 from $787.4 million in Q4 2023, a decline of 14%[44]. Financing Activities - The company issued $100,000,000 in 2029 convertible senior notes during the year, contributing to financing activities[34]. - Operating cash flow for the year ended December 31, 2024, was a net cash used of $15,130,000, an improvement from $19,765,000 used in 2023[34]. - The company plans to focus on IT transformation costs, which amounted to $0.1 million in Q4 2024, as part of its strategy to enhance operational efficiency[36].

Core Insights - LivePerson, Inc. is set to release its fourth quarter financial results on March 5, 2025, after market close [1] - The conference call will be hosted by CEO John Sabino and CFO & COO John Collins at 5:00 p.m. Eastern Time on the same day [1] Company Overview - LivePerson is a leader in enterprise conversational AI and digital transformation, serving major brands like HSBC, Chipotle, and Virgin Media [3] - The company facilitates nearly one billion conversational interactions monthly, providing data analytics and safety tools to enhance business outcomes [3] - LivePerson has been recognized as the 1 Most Innovative AI Company in the world by Fast Company [3]

Momentum Investing Strategy - Momentum investing focuses on buying high and selling higher, rather than buying low and selling high, aiming to make more money in less time [7] - Fast-moving trending stocks can be risky as they may lose momentum when valuations exceed future growth potential, leading to limited upside or downside [1] - The Zacks Momentum Style Score is useful for identifying stocks with strong price or earnings trends [4] LivePerson (LPSN) Analysis - LPSN has gained 14.4% over the past 12 weeks, demonstrating strong momentum [2] - The stock has a beta of 1.59, indicating it moves 59% higher than the market in either direction [2] - LPSN has a Momentum Score of A, suggesting it is a good time to enter the stock to capitalize on its momentum [5] - The stock has a four-week price change of 62.2%, reflecting growing investor interest [8] - LPSN has a Zacks Rank 2 (Buy) due to upward earnings estimate revisions, which often attract more investors and drive price increases [9] - The stock is trading at a reasonable valuation with a Price-to-Sales ratio of 0.36, meaning investors pay 36 cents for each dollar of sales [9] Other Momentum Stocks and Tools - Several other stocks pass the 'Fast-Paced Momentum at a Bargain' screen, offering potential investment opportunities [3] - Zacks Premium Screens, including over 45 options, can help investors find winning stocks based on their personal investing style [6] - The Zacks Research Wizard allows investors to backtest strategies and access successful stock-picking strategies [10]

Company Announcement - LivePerson announced the appointment of Christopher Mina as Chief Technology & Product Officer, responsible for setting the company's product vision and overseeing engineering and product operations to enhance customer experience and accelerate innovation [1] - Christopher Mina previously held leadership roles at Vonage, LivePerson, and RingCentral, with expertise in UCaaS, CCaaS, Conversational AI, and enterprise software [2] - The CEO highlighted Mina's strategic vision for leveraging AI across communication channels and his experience in guiding global enterprise brands through digital transformations [3] Industry and Technology - LivePerson is a leader in enterprise conversational AI and digital transformation, serving major brands like HSBC, Chipotle, and Virgin Media [4] - The company's Conversational Cloud platform powers nearly a billion conversational interactions monthly, providing rich data analytics and safety tools [4] - LivePerson was named the 1 Most Innovative AI Company by Fast Company, emphasizing its cutting-edge AI technology and digital expertise [4] Strategic Vision - Christopher Mina expressed excitement about rejoining LivePerson to guide product strategy and unlock value for customers through meaningful and connected consumer engagement across voice and digital touchpoints [3] - The company aims to transform customer experiences by combining its extensive digital experience with best-of-breed systems and AI technologies [3]

Core Insights - LivePerson, Inc. has appointed two new board members, Dan Fletcher and Karin-Joyce (K.J.) Tjon, to enhance its board's expertise in business turnarounds and financial execution [1][2][3] Group 1: Board Appointments - Dan Fletcher has over 17 years of experience in financial, strategic, and operational transformations within the SaaS industry, currently serving as CFO of Planful and as an Operating Principal at Vector Capital Management, L.P., LivePerson's largest investor [2] - Karin-Joyce (K.J.) Tjon brings over 25 years of executive and board leadership experience in technology and SaaS industries, with a strong background in business transformation and financial restructuring [3] - Following these appointments, LivePerson's Board now consists of eight directors, with seven being independent and six having joined in the past two years, reflecting a significant refresh of the board [4] Group 2: Company Overview - LivePerson is a leader in enterprise conversational AI and digital transformation, serving major brands like HSBC, Chipotle, and Virgin Media, and facilitating nearly a billion conversational interactions monthly [5] - The company has been recognized as the 1 Most Innovative AI Company in the world by Fast Company, highlighting its impact and leadership in the conversational AI space [5]