LivePerson(LPSN) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Highlights Key Financial Highlights LivePerson reported Q2 2025 total revenue of $59.6 million, a 25.4% year-over-year decrease, with Adjusted EBITDA exceeding guidance Q2 2025 Key Financial Highlights | Metric | Q2 2025 Value | | :------------------------------------ | :------------ | | Total Revenue | $59.6 million | | Total Revenue Growth (YoY) | (25.4)% | | Adjusted EBITDA | Above high-end of guidance | | Trailing-twelve-months ARPC (YoY) | +4.0% | | Trailing-twelve-months ARPC (Value) | $655,000 | Strategic and Operational Commentary The company secured a refinancing agreement, deleveraging its balance sheet by $226 million and extending its runway through 2029, alongside a 45% sequential increase in Generative AI conversations - Secured a refinancing agreement that significantly deleverages the balance sheet and provides a clear runway to execute strategy through 2029[5][6] - Achieved a 45% sequential increase in conversations powered by the Generative AI suite[5] - Deepened strategic partnership with Google Cloud[5] Debt Deleveraging Impact | Metric | Value | | :-------------------- | :------------ | | Debt Discount Captured | $181 million | | Balance Sheet Deleveraging | $226 million | Customer Expansion LivePerson signed 38 deals in Q2, including 35 expansions and renewals with existing customers, and 3 new logo deals with major global clients - Signed 38 total deals in Q2 2025[4][7] - 35 deals were with existing customers (expansions and renewals)[7] - 3 deals were with new customers, including a global financial services company, a major European retailer, one of Australia's largest retail groups, and a leading U.S. health plan provider[7][8] Condensed Consolidated Financial Statements Condensed Consolidated Statements of Operations For Q2 2025, LivePerson reported a net loss of $15.7 million, a significant decline from Q2 2024's net income, primarily due to a prior year gain on debt extinguishment Condensed Consolidated Statements of Operations (Selected Metrics, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $59,600 | $79,875 | $124,300 | $165,024 | | Cost of revenue | $18,038 | $16,432 | $36,256 | $40,887 | | Sales and marketing | $19,888 | $25,733 | $43,373 | $54,963 | | General and administrative | $7,945 | $24,415 | $24,729 | $46,009 | | Product development | $13,843 | $19,674 | $29,877 | $44,309 | | Loss from operations | $(6,433) | $(29,799) | $(23,377) | $(66,163) | | Gain on debt extinguishment | — | $73,083 | — | $73,083 | | Net (loss) income | $(15,710) | $41,795 | $(29,843) | $6,164 | | Basic Net (loss) income per share | $(0.17) | $0.47 | $(0.32) | $0.07 | | Diluted Net (loss) income per share | $(0.17) | $(0.33) | $(0.37) | $(0.70) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $(14.8) million for the six months ended June 30, 2025, with financing activities shifting to net cash provided Condensed Consolidated Statements of Cash Flows (Selected Metrics, in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net (loss) income | $(29,843) | $6,164 | | Stock-based compensation expense | $8,969 | $13,458 | | Gain on debt extinguishment | — | $(73,083) | | Net cash used in operating activities | $(14,772) | $(16,832) | | Net cash used in investing activities | $(7,947) | $(17,716) | | Net cash provided by (used in) financing activities | $444 | $(31,797) | | Net decrease in cash and cash equivalents | $(21,274) | $(66,968) | | Cash and cash equivalents - end of period | $161,963 | $145,957 | Condensed Consolidated Balance Sheets Total assets slightly decreased to $605.0 million as of June 30, 2025, while total liabilities increased and stockholders' equity remained negative Condensed Consolidated Balance Sheets (Selected Metrics, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $161,963 | $183,237 | | Accounts receivable, net | $23,505 | $28,737 | | Prepaid expenses and other current assets | $46,158 | $19,250 | | Total current assets | $231,626 | $231,224 | | Total assets | $605,041 | $607,778 | | Total current liabilities | $141,438 | $139,940 | | Convertible senior notes | $537,866 | $527,070 | | Total liabilities | $687,453 | $675,094 | | Total stockholders' equity | $(82,412) | $(67,316) | Disaggregated Revenue Disaggregated Revenue by Source Hosted services revenue decreased by 25.3% to $50.3 million in Q2 2025, while professional services revenue also declined by 26.1% Disaggregated Revenue by Source (in thousands) | Revenue Source | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Hosted services | $50,321 | $67,316 | $105,455 | $138,811 | | Professional services | $9,279 | $12,559 | $18,845 | $26,213 | | Total revenue | $59,600 | $79,875 | $124,300 | $165,024 | Non-GAAP Financial Measures and Reconciliations Adjusted EBITDA and Adjusted Operating (Loss) Income Reconciliation Adjusted EBITDA for Q2 2025 was $2.9 million, down from $8.2 million in Q2 2024, with adjusted operating loss at $2.7 million Adjusted EBITDA and Adjusted Operating (Loss) Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP net (loss) income | $(15,710) | $41,795 | $(29,843) | $6,164 | | Adjusted EBITDA | $2,919 | $8,208 | $3,086 | $8,685 | | Adjusted operating (loss) income | $(2,659) | $494 | $(8,079) | $(7,254) | Free Cash Flow and Non-GAAP Expense Reconciliations Free Cash Flow for Q2 2025 improved to $(14.8) million, and non-GAAP expenses exclude items like stock-based compensation Free Cash Flow (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(11,676) | $(17,931) | $(14,772) | $(16,832) | | Purchases of property and equipment, including capitalized software | $(3,136) | $(4,956) | $(6,895) | $(16,457) | | Total Free Cash Flow | $(14,812) | $(22,887) | $(21,667) | $(33,289) | Non-GAAP Expenses (Three Months Ended June 30, 2025, in thousands) | Expense Category | GAAP Amount | Non-GAAP Amount | | :------------------------------------ | :---------- | :-------------- | | Cost of revenue | $18,038 | $17,725 | | Sales and marketing expenses | $19,888 | $18,829 | | General and administrative expenses | $7,945 | $7,736 | | Product development expenses | $13,843 | $12,391 | Financial Expectations Third Quarter 2025 Guidance Q3 2025 revenue is projected between $56 million and $59 million, with Adjusted EBITDA expected to be a loss between $(4) million and $(2) million Third Quarter 2025 Guidance | Metric | Guidance | | :-------------------- | :----------------- | | Revenue (in millions) | $56 - $59 | | Revenue growth (YoY) | (25)% - (21)% | | Adjusted EBITDA (in millions) | $(4) - $(2) | | Adjusted EBITDA margin (%) | (7.1)% - (3.4)% | | Recurring revenue | 93% of total revenue | Full Year 2025 Guidance Full year 2025 revenue is anticipated between $230 million and $240 million, with Adjusted EBITDA ranging from $(3) million to $7 million Full Year 2025 Guidance | Metric | Guidance | | :-------------------- | :------------------------ | | Revenue (in millions) | $230 - $240 | | Revenue growth (YoY) | (26)% - (23)% | | Adjusted EBITDA (in millions) | $(3) - $7 | | Adjusted EBITDA margin (%) | (1.3)% - 2.9% | | Recurring revenue | 93% of total revenue | Additional Information About LivePerson, Inc. LivePerson leads enterprise conversational AI and digital transformation, powering nearly a billion monthly interactions and recognized as a top innovative AI company - LivePerson is a leader in trusted enterprise conversational AI and digital transformation[2][23] - Powers nearly a billion conversational interactions every month for leading brands like HSBC and Virgin Media[23] - Named the 1 Most Innovative AI Company in the world by Fast Company[23] Non-GAAP Financial Measures Definition This section defines non-GAAP measures like Adjusted EBITDA and Free Cash Flow, cautioning they are not alternatives to GAAP for performance indication - Defines non-GAAP financial measures such as Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Operating (Loss) Income, Free Cash Flow, and non-GAAP expenses for various operational categories[24] - These measures exclude items like interest, taxes, depreciation, amortization, stock-based compensation, litigation costs, restructuring costs, and gain/loss on debt extinguishment[24] - Non-GAAP information should not be construed as an alternative to GAAP measures or as an indicator of operating performance, liquidity, or cash flows[25] Forward-Looking Statements The report contains forward-looking statements, subject to risks and uncertainties that could cause actual results to differ materially from projections - Statements regarding LivePerson's future, including financial guidance and capital structure changes, are forward-looking[26] - These statements are subject to risks and uncertainties that could cause actual results to differ materially[26][27] - Key risk factors include customer retention, personnel management, debt refinancing, lengthy sales cycles, payment-related risks, market competition, general economic conditions, security breaches, regulatory changes, and intellectual property protection[27] Earnings Teleconference and Supplemental Presentation LivePerson discussed Q2 2025 results via teleconference on August 11, 2025, with a replay and supplemental information available online - A teleconference to discuss Q2 2025 financial results was held on August 11, 2025, at 5:00 PM ET[20] - A replay of the teleconference is available until August 25, 2025[21] - Supplemental information for Q2 2025 is posted on the investor relations section of the Company's website at www.ir.liveperson.com[19](index=19&type=chunk)[22]