LivePerson(US:LPSN)2023-03-17 20:18Financial Data and Key Metrics Changes - For the fourth quarter of 2022, total revenue was $122.5 million, and for the full year, it was $514.8 million, reflecting a year-over-year decline of 18% to 15% for total revenue in 2023 [31][36] - Adjusted EBITDA for the fourth quarter was a loss of $5.2 million, and for the full year, it was a loss of $16.2 million [31] - The company expects total revenue for the first quarter of 2023 to range from $106 million to $109 million, a decrease of 19% to 16% year-over-year [42] Business Line Data and Key Metrics Changes - B2B revenue declined approximately 1% year-over-year, while hosted software revenues declined 8% year-over-year [32] - Professional services revenue grew 30%, driven primarily by a diagnostics project [32] - The consumer segment declined 3% due to decreased marketing spend [32] Market Data and Key Metrics Changes - U.S. revenue grew 3% year-over-year, while international revenue declined 8% due to headwinds in EMEA [33] - The company signed a total of 90 deals in the quarter, including 46 expansions and renewals, and 44 new logo deals [33] - Net revenue retention for total revenue was below the target range of 105% to 115%, while net retention for recurring revenue was above 100% but below the target range [41] Company Strategy and Development Direction - The company is focused on simplifying its business and increasing transparency regarding revenues, with a strong emphasis on the B2B core and AI-led growth [17][20] - The goal is to achieve annualized EBITDA margins of 16% to 19% by year-end, with positive cash flow beginning in Q2 [19][37] - The company aims to leverage its AI capabilities to automate a larger percentage of conversations, targeting 80% to 90% automation [47] Management's Comments on Operating Environment and Future Outlook - Management indicated that Q1 will be the trough for revenue, EBITDA, and cash flow, with expectations for improvement starting in Q2 [17] - The company has reduced its cost structure by 36% or $200 million in annualized costs, which is expected to yield double-digit adjusted EBITDA margins [20][44] - The management expressed confidence in the company's ability to generate strong earnings and cash flow moving forward, particularly through AI initiatives [15][45] Other Important Information - The company has classified the consumer segment as held for sale, with a targeted transaction close date before the end of the month [27] - The company expects to exit the year with at least a 16% adjusted EBITDA margin and up to a 10% free cash flow margin [21][37] Q&A Session Summary Question: What are the expectations for revenue and EBITDA in 2023? - The company expects total revenue to range from $422 million to $436 million, reflecting a decrease of 18% to 15% year-over-year, and adjusted EBITDA to range from $15 million to $32 million, with a margin of 4% to 7% [36][37] Question: How is the company addressing non-core revenue? - The company has wound down non-core business lines, which are expected to decline by more than $70 million year-over-year, focusing instead on the B2B core [21][23] Question: What is the strategy for AI and automation? - The company aims to automate 80% to 90% of conversations using large language models, enhancing efficiency and scalability in customer engagement [47][56]