Core Insights - LivePerson has been included in Gartner's "Competitive Landscape: Digital Customer Service" report, highlighting its role in the evolving customer engagement landscape [1][2] - The company emphasizes a shift towards seamless, orchestrated conversations rather than siloed channels, positioning its connected experience platform as a solution for future customer engagement needs [1][6] - LivePerson's platform allows integration with existing CRM and CCaaS systems, supporting businesses in automating and personalizing customer interactions [1][6] Market Trends - The market is moving towards managing continuous conversations across various channels, focusing on dialogue as the core unit of interaction [6] - An AI-first approach is becoming essential for scaling conversations, enabling automation, and personalization, with LivePerson's platform supporting flexibility in using different large language models (LLMs) [6] - There is an emphasis on composability and open platforms, with vendors adopting API-first architectures to allow businesses to create tailored solutions and enhance their technology stacks [6] Company Performance - LivePerson powers nearly a billion conversational interactions each month, providing rich data analytics and safety tools to improve business outcomes [4] - The company has been recognized as the 1 Most Innovative AI Company in the world by Fast Company, underscoring its leadership in the conversational AI space [4]

Core Viewpoint - LivePerson (LPSN) has experienced a significant downtrend, with a 34.6% decline over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround due to improved earnings expectations from analysts [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold conditions, with a reading below 30 indicating a stock may be oversold [2]. - LPSN's current RSI reading is 26.91, indicating that the heavy selling pressure may be exhausting, which could lead to a price rebound [5]. Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts regarding LPSN's earnings estimates, with a 7% increase in the consensus EPS estimate over the last 30 days, suggesting potential price appreciation [7]. - LPSN holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a favorable outlook for a near-term turnaround [8].

Core Viewpoint - LivePerson has successfully completed a deleveraging transaction, marking a significant milestone in its multi-year effort to strengthen its financial foundation and reduce debt [1][4]. Financial Positioning - The transaction has materially deleveraged the company by $226 million, shifting enterprise value from debt holders to equity holders [8]. - LivePerson captured a significant $181 million debt discount, which is directly accretive to all shareholders [8]. - The company's debt maturity profile has been extended to December 2029, providing financial certainty and a clear operational runway [8]. Strategic Focus - The successful refinancing allows LivePerson to sharpen its focus on strategic execution and innovation, positioning the company to generate positive cash flow in 2026 [2][5]. - Recent partnerships with Google Cloud and AWS, along with industry recognition from Gartner and G2, enhance the company's strategic positioning [3]. Cost Structure Adjustments - LivePerson has proactively implemented significant adjustments to its cost structure, including a streamlined workforce, to align expenses with business performance [4]. - These actions are aimed at strengthening the company's financial profile and accelerating its path to profitability [4].

Core Viewpoint - Purcell & Lefkowitz LLP is investigating LivePerson, Inc. to determine if the company's directors breached their fiduciary duties related to recent corporate actions [1]. Group 1 - The investigation is on behalf of LivePerson's shareholders [1]. - Shareholders interested in more information about their rights and options are encouraged to visit the law firm's website or contact them directly [1]. Group 2 - Purcell & Lefkowitz LLP specializes in representing shareholders affected by securities fraud, breaches of fiduciary duty, and corporate misconduct [2]. - The firm emphasizes that prior results do not guarantee similar outcomes [2].

Core Viewpoint - LivePerson (LPSN) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The change in a company's future earnings potential, as indicated by earnings estimate revisions, is strongly correlated with near-term stock price movements [3]. - Institutional investors utilize earnings estimates to determine the fair value of a company's shares, leading to buying or selling actions that affect stock prices [3]. LivePerson's Earnings Outlook - The recent rating upgrade for LivePerson reflects an improvement in the company's underlying business, which is expected to positively influence its stock price [4]. - Over the past three months, the Zacks Consensus Estimate for LivePerson has increased by 1.9% [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [6]. - LivePerson's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [9].

Core Insights - LivePerson is collaborating with Amazon Web Services (AWS) to integrate Amazon Connect with its digital contact center, aiming to enhance customer service through a unified platform that combines AI capabilities and conversational intelligence [1][2][3] Group 1: Integration Benefits - The integration will provide contact center agents with a single interface to manage all interactions, improving efficiency and customer satisfaction [2] - Businesses can reduce operational complexity and costs by eliminating separate telephony requirements, allowing for more efficient scaling of customer service operations [2][3] Group 2: Advanced Features - The combined platform will offer seamless transitions between automated systems and human support, enhancing customer service experiences [3] - LivePerson's digital contact center will support a wide array of communication channels, including SMS, WhatsApp, and various messaging apps, providing a comprehensive digital toolkit [7] Group 3: AI Capabilities - The integration will feature advanced conversational AI, including generative AI capabilities such as conversation summarization and specialized AI agents for routing and data gathering [7] - LivePerson's platform will consolidate customer sentiment and agent performance data from any voice or digital provider, creating a fully unified conversational intelligence platform [7]

Core Insights - LivePerson has been recognized as a Niche Player in the 2025 Gartner Magic Quadrant for Conversational AI Platforms, marking its first evaluation in this report [1][2] - The recognition enhances LivePerson's credibility and supports its long-term position as a strategic provider of enterprise conversational AI [2] - LivePerson's Connected Experience Platform facilitates AI-driven engagements across digital and voice channels, focusing on customer service, support, and digital commerce [2][4] Company Overview - LivePerson is a leading provider of enterprise conversational AI, empowering over 1,000 brands in more than 100 countries [2] - The company manages nearly a billion conversational interactions monthly, providing a rich data set and AI-powered solutions for contact center transformation and personalized customer experiences [4] - LivePerson has been named the 1 Most Innovative AI Company in the world by Fast Company [4] Market Position - The Gartner Magic Quadrant serves as a critical resource for brands selecting conversational AI platforms, emphasizing the importance of complex automation and multimodal interactions [3] - To qualify for inclusion in the Magic Quadrant, providers must meet Gartner's criteria and demonstrate execution capability and completeness of vision [3]

Financial Performance - Revenue for Q2 2025 was $59.6 million, a decrease of 25.4% compared to $79.9 million in Q2 2024[14] - Net loss for Q2 2025 was $15.7 million, compared to a net income of $41.8 million in Q2 2024[16] - Total comprehensive loss for Q2 2025 was $12.2 million, compared to a comprehensive income of $41.8 million in Q2 2024[16] - Net loss for the six months ended June 30, 2025, was $29,843,000 compared to a net income of $6,164,000 for the same period in 2024[21] - For the six months ended June 30, 2025, total revenue was $124.3 million, down 24.7% from $165.0 million in the prior year[48] - Hosted services revenue for the three months ended June 30, 2025, was $50.3 million, a decline of 25.2% from $67.3 million in 2024[48] - Professional services revenue for the three months ended June 30, 2025, was $9.3 million, down 26.0% from $12.6 million in 2024[48] Assets and Liabilities - Total assets as of June 30, 2025, were $604.2 million, slightly down from $607.8 million at the end of 2024[12] - Total liabilities increased to $686.6 million as of June 30, 2025, from $675.1 million at the end of 2024[12] - Cash and cash equivalents decreased to $162.0 million from $183.2 million at the end of 2024[12] - Total prepaid expenses and other current assets increased to $45,331,000 as of June 30, 2025, compared to $19,250,000 as of December 31, 2024[39] - Total long-lived assets as of June 30, 2025 were $373,415 thousand, a slight decrease from $376,554 thousand as of December 31, 2024[67] - The total accrued expenses and other current liabilities as of June 30, 2025 were $71,554 thousand, an increase from $66,582 thousand as of December 31, 2024[80] Operating Expenses - Cost of revenue for Q2 2025 was $18.0 million, up from $16.4 million in Q2 2024[14] - Sales and marketing expenses decreased to $19.9 million in Q2 2025 from $25.7 million in Q2 2024[14] - General and administrative expenses dropped to $7.9 million in Q2 2025 from $24.4 million in Q2 2024[14] - The company reported a loss from operations of $6.4 million in Q2 2025, compared to a loss of $29.8 million in Q2 2024[14] - Stock-based compensation expense for the six months ended June 30, 2025, was $8,969,000, down from $13,458,000 in 2024[21] - The Company recognized restructuring costs of $0.6 million and $1.9 million for Q2 2025 and the first half of 2025, respectively[149] Cash Flow and Financing - The company reported a net cash used in operating activities of $14,772,000 for the six months ended June 30, 2025, compared to $16,832,000 in 2024[21] - The company incurred $6,895,000 in purchases of property and equipment for the six months ended June 30, 2025[21] - The company recognized a gain on debt extinguishment of $73,083,000 in the previous period, which is not reflected in the current period[21] - The Company recognized a $68.1 million gain on debt extinguishment during Q2 2024 from the exchange of $146.0 million principal amount of 2026 Notes for new 2029 Notes[92] - The Company entered into an exchange agreement on August 11, 2025, involving approximately $341.1 million of 2026 Notes for $45.0 million in cash and $115.0 million of 2029 Notes[96] Debt and Interest - The aggregate principal amount of the 2026 Notes was $361.2 million, with a carrying amount of $359.2 million[95] - The carrying amount of the 2029 Notes is $178.7 million as of June 30, 2025, consisting of principal of $214.4 million, net of unamortized issuance costs of $6.8 million and debt discount of $28.8 million[110] - Total interest expense for the three months ended June 30, 2025, was $7.866 million, compared to $2.423 million for the same period in 2024[111] - The effective interest rate for the 2029 Notes is 19.13%, while the Delayed Draw Notes have an effective interest rate of 13.28% as of June 30, 2025[110] Stock and Equity - The Company matched 100% of the first 3% and 50% of the next 2% of eligible compensation under its 401(k) plan, with employer matching contributions totaling $0.5 million for Q2 2025[131] - The number of shares authorized for issuance under the 2019 Stock Incentive Plan was 52,307,744 as of June 30, 2025[138] - The Company had 11,507 thousand non-vested RSUs outstanding as of June 30, 2025, with an aggregate fair value of $11.622 million[144] - The Company has 4,500,000 shares authorized for issuance under the Employee Stock Purchase Plan, with 2,439,870 shares remaining available as of June 30, 2025[139] Legal and Regulatory - The Company faced multiple legal actions, including a dismissed class action lawsuit and ongoing derivative actions related to alleged misrepresentations in public disclosures[151][154] - The Company has discontinued all products and services related to COVID-19 and is cooperating with governmental inquiries regarding its previous offerings[157] - The Company is evaluating the impacts of the One Big Beautiful Bill Act ("OBBBA") enacted on July 4, 2025, which includes significant changes to business expenditure deductibility[164] Risk Management - The Company actively monitors foreign currency exchange risks and may consider using derivative financial instruments to mitigate such risks in the future[224]

Company Performance - LivePerson reported a quarterly loss of $0.11 per share, better than the Zacks Consensus Estimate of a loss of $0.20, and a significant improvement from a loss of $0.69 per share a year ago, resulting in an earnings surprise of +45.00% [1] - The company posted revenues of $59.6 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.19%, although this represents a decline from year-ago revenues of $79.88 million [2] - Over the last four quarters, LivePerson has exceeded consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - LivePerson shares have declined approximately 20.4% since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.18 on revenues of $57.56 million, and for the current fiscal year, it is -$0.63 on revenues of $240.99 million [7] Industry Outlook - The Internet - Services industry, to which LivePerson belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact LivePerson's stock performance [5]

Financial Data and Key Metrics Changes - The company reported revenue of $59.6 million, which was above the midpoint of their guidance range [6][23] - Adjusted EBITDA was $2.9 million, exceeding the high end of the guidance range [6][23] - Full year revenue guidance was revised down to $235 million at the midpoint, a decrease of approximately 5% [17][27] - Cash on the balance sheet at the end of the second quarter was $162 million [27] Business Line Data and Key Metrics Changes - Revenue from hosted services was $50.3 million, down 25% year over year [24] - Professional services revenue was $9.3 million, down 26% year over year [24] - Recurring revenue accounted for 92% of total revenue, amounting to $55 million [24] - Average revenue per customer increased by 4% year over year to $655,000 [25] Market Data and Key Metrics Changes - U.S. revenue was $36.7 million, while international revenue was $22.9 million, representing 62% of total revenue [24] - Net revenue retention declined to 78%, down from 80% in the first quarter [25][26] Company Strategy and Development Direction - The company is focusing on strengthening its capital structure through a refinancing agreement, which extends debt maturities to 2029 [5][6] - Strategic partnerships with Google Cloud and Databricks are being deepened to enhance product offerings and market presence [12][14] - The vision is to embed AI into every interaction, transforming customer interactions into real business outcomes [8][12] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic uncertainty is extending enterprise buying cycles, particularly for high-value AI solutions [15][16] - The refinancing agreement is expected to alleviate concerns regarding financial stability and improve customer confidence [16][21] - The company anticipates that the strategic partnerships will amplify market presence and deliver integrated solutions to a wider range of enterprises [15][14] Other Important Information - The company signed a total of 38 deals in the second quarter, including three new logos and 35 expansions and renewals [21][22] - The refinancing agreement is expected to shift a greater proportion of enterprise value to equity holders by significantly reducing total indebtedness [5][21] Q&A Session Summary Question: How are win rates trending for new logo capture? - Management indicated that win rates remain consistent, but decision-making processes are being delayed due to RFPs being pushed out [32] Question: What is the impact of new AI-based competitors on decision-making cycles? - Management acknowledged that new competitors are increasing headwinds, contributing to longer decision-making cycles [34] Question: Are large customers primarily responsible for renewal pressures? - Yes, management confirmed that large customers are hesitant due to financial concerns, impacting renewal discussions [35] Question: What is the impact of macroeconomic uncertainty versus balance sheet issues? - Both factors are interrelated, with financial instability exposing the company to increased competition [42] Question: When will the migration to Google Cloud be fully completed? - Some customers will see benefits around October this year, with most migrations expected to be completed early next year [44]