LivePerson (NasdaqGS:LPSN) Q4 2025 Earnings call March 12, 2026 05:00 PM ET Company ParticipantsJohn Collins - CFO and COOJohn Sabino - CEOJon Perachio - VP of Investor RelationsConference Call ParticipantsDaniel Hibshman - AnalystRyan MacDonald - Managing Director and Senior Equity Research AnalystOperatorGood afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's fourth quarter 2025 earnings conference call. My name is Joe, and I will be your conference operator today. At this ...

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $69.3 million, exceeding the high end of guidance, driven by higher variable revenue [21] - Adjusted EBITDA for Q4 was $10.8 million, also above the high end of guidance, attributed to cost restructuring and disciplined operational execution [21] - Recurring revenue constituted 89% of total revenue, with a decline in professional services revenue by 36% year-over-year [21][22] - Average revenue per customer increased by 9% year-over-year to $680,000 [22] - Cash on the balance sheet at the end of Q4 was $95 million [22] Business Line Data and Key Metrics Changes - Revenue from hosted services was $51 million, down 15% year-over-year [21] - Professional services revenue was $8.3 million, reflecting a significant decline [21] - The launch of Syntrix is expected to drive upsell opportunities and improve retention capabilities [45] Market Data and Key Metrics Changes - The company signed 40 deals in Q4, including 4 new logos and 36 expansions, indicating a slight increase in total deal value [18] - Strong adoption of the platform was noted in regulated industries such as banking, telecommunications, and airlines [19] - Over 20% of all conversations in Q4 leveraged Generative AI tools, indicating deeper AI adoption [8] Company Strategy and Development Direction - The company is focused on three primary areas: customer growth and retention, innovation in the Conversational Cloud platform, and expanding technology partnerships [4] - Syntrix is positioned as a comprehensive assurance layer for AI deployments, addressing market gaps in trust and compliance [6][7] - The partnership with Google Cloud is expected to simplify procurement and enhance customer retention, with a material fraction of revenue anticipated to flow through this channel by the end of 2026 [10][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive net new ARR in the second half of 2026, despite expected revenue declines throughout the year [16][23] - The company aims to transition from stabilization to targeted execution, leveraging high-efficiency channels for customer retention and future growth [25] - The focus remains on disciplined execution of strategic priorities, including product innovation and strengthening the partner network [25] Other Important Information - The company expects revenue for the full year 2026 to range from $195 million to $207 million, with approximately 92% expected to be recurring [23] - Adjusted EBITDA for 2026 is projected to range from a loss of $4 million to a gain of $7 million [24] Q&A Session Summary Question: Can you walk us through the decrease in total OpEx for Q4? - The decrease was primarily due to a large restructuring executed in the prior quarter, with some one-time items but mainly structural changes [29] Question: How do you expect net new ARR to grow while revenue declines? - Historical customer losses will offset the positive revenue from net new ARR, leading to sequential revenue declines [31] Question: Can you expand on the demand for Syntrix and its development? - Demand initially focused on simulation capabilities, evolving into a broader solution addressing compliance and governance challenges in AI deployments [36][38] Question: What is the pricing model for Syntrix? - The pricing model is conversation-based, reflecting consumption rather than seat-based, and is expected to drive upsell opportunities [43][45] Question: How does Google Cloud Marketplace impact your sales strategy? - It serves as a retention lever, simplifying procurement and potentially increasing renewals and new opportunities through aligned incentives [47][51]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $69.3 million, exceeding the high end of guidance, driven by higher variable revenue [21] - Adjusted EBITDA for Q4 2025 was $10.8 million, also above the high end of guidance, attributed to improved cost structure and operational execution [21] - Recurring revenue was $52.9 million, representing 89% of total revenue, while professional services revenue was $8.3 million, down 36% year-over-year [21] - Average revenue per customer increased by 9% year-over-year to $680,000 [22] - Cash on the balance sheet at the end of Q4 was $95 million [22] Business Line Data and Key Metrics Changes - Revenue from hosted services was $51 million, down 15% year-over-year [21] - The company signed 40 deals in Q4, including 4 new logos and 36 expansions, indicating a slight sequential increase in total deal value [18] - Over 20% of all conversations in Q4 leveraged Generative AI tools, showing strong adoption of AI capabilities [8] Market Data and Key Metrics Changes - The company is seeing strong traction in regulated industries such as banking, telecommunications, and airlines, with significant renewals from major players in these sectors [18] - The partnership with Google Cloud is yielding early results, including a multi-million dollar renewal through the Google Cloud Marketplace [10] Company Strategy and Development Direction - The company is focused on three primary areas: customer growth and retention, innovation in the Conversational Cloud platform, and expanding technology partnerships [4] - The launch of Syntrix is a key strategic growth opportunity, aimed at addressing market gaps in AI deployment assurance [6][7] - The company plans to complete its multi-year platform modernization in the first half of 2026, which is foundational for long-term scalability [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive net new ARR in the second half of 2026, despite expected revenue declines throughout the year [16][23] - The company anticipates that the launch of Syntrix will drive future growth and improve customer retention [25] - Management emphasized the importance of disciplined execution and cost management to support long-term value creation [25] Other Important Information - The company expects full-year 2026 revenue to range from $195 million to $207 million, with approximately 92% expected to be recurring [23] - Adjusted EBITDA for 2026 is expected to range from a loss of $4 million to a gain of $7 million [24] Q&A Session Summary Question: Can you walk us through the decrease in total OpEx for Q4? - Management indicated that the decrease was primarily due to a large restructuring executed in the prior quarter, with some one-time items but mainly structural changes [28] Question: How does positive net new ARR relate to expected revenue declines? - Management clarified that while they expect positive net ARR in the second half, historical customer losses will continue to impact revenue negatively throughout 2026 [30] Question: Can you expand on the demand for Syntrix and its development? - Management noted that initial demand was for simulation capabilities, but it evolved into a broader solution addressing compliance and governance challenges in AI deployment [36] Question: What is the pricing model for Syntrix? - The pricing model for Syntrix is conversation-based, allowing for consumption-based pricing that aligns with customer needs [42] Question: How does Google Cloud Marketplace impact the sales strategy? - Management stated that the Google Cloud Marketplace serves as a retention lever, simplifying procurement and potentially driving new business opportunities [46]