LivePerson(US:LPSN)2025-05-08 21:26PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2025 and 2024, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, highlighting a 24% revenue decline to $64.7 million, a narrowed net loss of $14.1 million, and negative cash flow from operations of $3.1 million Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $221,754 | $231,224 | | Total assets | $596,220 | $607,778 | | Total current liabilities | $134,202 | $139,940 | | Total liabilities | $671,164 | $675,094 | | Total stockholders' equity | $(74,944) | $(67,316) | Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $64,700 | $85,149 | | Loss from operations | $(16,944) | $(36,364) | | Net loss | $(14,133) | $(35,631) | | Net loss per share (Basic) | $(0.15) | $(0.40) | | Net loss per share (Diluted) | $(0.24) | $(0.40) | Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(3,096) | $1,099 | | Net cash used in investing activities | $(4,145) | $(12,710) | | Net cash used in financing activities | $(26) | $(72,697) | | Net decrease in cash and cash equivalents | $(6,983) | $(83,908) | | Cash, cash equivalents and restricted cash - end of period | $176,254 | $129,017 | - The company operates as a single operating and reportable segment, with the Chief Executive Officer acting as the chief operating decision maker (CODM)65 - The company's revenue is primarily generated from hosted services, which amounted to $55.1 million in Q1 2025, down from $71.5 million in Q1 2024, with professional services contributing an additional $9.6 million4748 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports a 24% year-over-year revenue decrease for Q1 2025 due to customer cancellations, while significantly reducing operating expenses across all categories through cost-saving measures, and anticipates continued customer attrition in the first half of 2025 before a projected shift to positive net new annual recurring revenue in the second half, with current cash of $176.3 million deemed sufficient for the next 12 months - Key metrics show mixed performance, with Average Annual Revenue Per Customer (ARPC) increasing to approximately $640,000 for the trailing twelve months, up from $625,000 YoY, but revenue retention remaining low at approximately 80%, below the target range of 105% to 115%164 - The company expects short-term customer attrition to continue through the first half of 2025, with a transition toward positive net new annual recurring revenue expected in the second half of 2025165 Revenue and Expense Comparison (Q1 2025 vs Q1 2024) | Category | Q1 2025 ($M) | Q1 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $64.7 | $85.1 | (24)% | | Cost of Revenue | $18.2 | $24.5 | (26)% | | Sales and Marketing | $23.5 | $29.2 | (20)% | | General and Administrative | $16.8 | $21.6 | (22)% | | Product Development | $16.0 | $24.6 | (35)% | - As of March 31, 2025, the company had $176.3 million in cash and cash equivalents, which management anticipates will be sufficient to satisfy working capital and capital requirements for at least the next 12 months196203 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company identifies its main market risks as foreign currency exchange, collection, interest rate, and inflation, managing collection risk through an allowance for credit losses of $7.7 million as of March 31, 2025, while not using derivatives for hedging and believing interest rate and inflation risks are not material - The company monitors foreign currency exchange risks related to the NIS, Pound Sterling, Euro, Australian dollar, and Japanese Yen but does not currently use derivative financial instruments to mitigate this risk207 - Collection risk is managed through an allowance for credit losses, which decreased by $0.9 million to $7.7 million during Q1 2025208 - The company does not believe that inflation or changes in market interest rates have had a material effect on its business or financial results210211 Item 4. Controls and Procedures Based on an evaluation as of March 31, 2025, the company's management, including the CEO and CFO, concluded that its disclosure controls and procedures were effective, with no material changes made to internal control over financial reporting during Q1 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025213 - There were no changes in the company's internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting215 PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 13 of the financial statements, detailing ongoing legal matters including a putative stockholder class action, related derivative actions, a lawsuit from Starboard Value LP alleging fraud, and government inquiries concerning discontinued COVID-19 related products and services - The company is involved in a stockholder class action (Damri v. LivePerson), which was dismissed but is now pending appeal146 - Starboard Value LP filed a lawsuit alleging common law fraud and fraudulent inducement related to the settlement of a 2022 proxy contest, with the case scheduled for trial in June 2025150 - The company has received inquiries from Medicare, the Department of Justice, and the FDA regarding its previous COVID-19 testing products and services, which have since been discontinued151152 Item 1A. Risk Factors A new material risk factor is disclosed regarding the company's failure to comply with Nasdaq's minimum bid price requirement, potentially leading to delisting and triggering a 'Fundamental Change' under its convertible note indentures, which could accelerate debt repayment - On May 1, 2025, the company received a notification from Nasdaq for failing to maintain a minimum closing bid price of $1.00 for 30 consecutive trading days220 - The company has 180 calendar days from the notification to regain compliance by maintaining a closing bid price of at least $1.00 for a minimum of ten consecutive trading days220 - A potential delisting would negatively affect the stock price, impair trading ability, and constitute a 'Fundamental Change' under the indentures for the 2026 and 2029 Notes, which could lead to accelerated debt obligations222223 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports that there were no unregistered sales or repurchases of its equity securities during the three-month period ended March 31, 2025 - There were no unregistered sales of equity securities by the company during the three months ended March 31, 2025226 - There were no repurchases of equity securities by the company during the three months ended March 31, 2025227 Item 3. Defaults Upon Senior Securities The company reports that there have been no defaults upon its senior securities - None229 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable230 Item 5. Other Information The company reports no other material information and states that no director or executive officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025 - During the three months ended March 31, 2025, no director or executive officer of the Company adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement'233 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the principal executive officer and principal financial officer as required by the Sarbanes-Oxley Act of 2002, and the Inline XBRL data files - The exhibits filed with this report include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, as well as Inline XBRL documents235