LPSN - Earnings call 3 2023 | LivePerson, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's Third Quarter 2023 Earnings Conference Call. My name is Dana, and I will be your conference operator today. [Operator Instructions] As a reminder, this conference is being recorded. to conference like Mr. over now would turn call the to I Cooper Relations. Investor Vice Chad President, Senior Please sir. go ahead,

Chad Cooper

Thank you, Dana.

and during subject will Joining assumptions expectations me predictions, These and X, that statements CEO November John projections as Collins, call, to on the about and uncertainties. on XXXX call of CFO. today and other are Please today, future which based forward-looking and statements, make is risks statements Interim today's are are we results. note current our

Actual A and in certain may to financial conference press obligation press Also to factors, section discuss release financial Investor measures made SEC. results non-GAAP quarter, file in materially John? differ various turn forward-looking we time for Relations slides With during I any earnings this update this the John. are call, reports available included as from including due the today's We of the in will will release. to XX-Ks, in assume press is those over other with non-GAAP on call statements. that, XX-Qs we of call earnings during the no described as well release and and comments time the the include which today's to measures. website. GAAP highlights LivePerson's to the supplemental Both reconciliation

John Collins

would service channels by the the followed financials conclude AI-powered that today. Several with messaging years the with a guidance. and begin business, ago, of and I'll automation envisioned brief quarter customer asynchronous and wins, third for update Chad, you, us of LivePerson and future support. and a recent all thank discussion become and changes of joining Thank on customer to for you recap strategy an

messaging and convenience content visual to experience savings, Time voice. a superior make consumer dynamic

and the provider scaled the market automation arguably leading for embrace as and largest for and reflect We While vision, the we customer [indiscernible] business LivePerson the emerged service But provider world's scalability Today, of do most AI support. for many growth Enterprise. this of AI-powered the a and replatformed messaging enterprises. enables is profitability messaging current not cost-effective AI-powered an automation our opportunity. believe conversational

During the reduced resources lines pandemic, business focus into that allocate our investments to several effectively. non-core and ability made we opportunistic

Recognizing we a efficiently company digital year, that shuttering restructuring have profitability by the the our AI-powered refocused process have structure, on businesses multi-quarter customers meaningful which need Those last divesting investment a return enabling Since for we them strength. return shift delivered last enabled and to to change, began non-core on enterprise voice LivePerson core last automation. cost included legacy or interactions quarter. rightsizing that to to our to and our quarter, channels

Gartner Forrester, grow are and Based Considering XX% in the to on shortly. I'll XXXX. we're customer customers realizing on projections year-over-year and available estimated for combined and are and on support service growing generative which AI AI, elaborate demonstrable the seeing with return conversational from our markets traction approximately investment

growing well are meet to this positioned We demand.

partner, enable including the enterprise of for guardrails the third-party voice services and to analytics, architecture reasons, the for agent data unified voice enterprise-proven as to open trusted our adoption transformation, feedback human loop AI. messaging of generative customer and digital managed that in and set, safe secure continue LivePerson key return enterprises Our for choose embraces their platform, extensive strength and workspace large core AI,

platform most opportunity renewals. usage, expansions compelling acquisition, LivePerson. these that they shifting of market and logo customers, for driving on be and growing is traction the continues new air-powered return our to voice interactions the investment with demonstrable for automation and to strengths unlock Because also Significantly, platform generative legacy messaging AI increased

our May, the including ability that interactions suite to generative leverage preference customers this the meaningfully automation. voice case, channels AI enhanced for AI-powered validating of legacy a for a we've into AI precisely voice digital platform launched our use AI, trend, Since then, enhancements of many consumer To continued to digital seen legacy as boards. over elaborate and channels shift we in briefly which on reminder, voice

voice who For deflect customer calls example, automation was voice a an to which hospital resolution. early large using adopter to is AI and costs reduces messaging, meaningfully of of XX% voice to time

investment CRM questions using action. Voice customers An a determining also is directly aerospace purchase tools voice the and a leads components. customer, next using customer find and models is automation automation large language delivering and interface the integrated with with that to help AI to on voice including asking return serious in end the call best customer also applications from relevant

addition, strong Agent and generative Assist, seeing summarization, which optimizing reveals copilot, AI, cost for scaling customer we're experience where use actionable and productivity of insights including adoption service service improves for In interactions which automation. internal through efficiently

attributable Reinforcing automation. in coupled digital BXB increase that a where strategic AI enterprise demand was transformation quarter, new in investments strongly quarter, with new the world's also fourth early and platform the the renewed of generative a positioned We're focus AI. banks. expansion strengths sequential usage to deals, and we X-figure core X-figure AI terms we And renewal. with X-figure generative us In a accelerating for of generative logo meet essential, signed our the signed largest a one in to in third AI-powered observing has on

the of we consistent quarter, signed As new logos, and third overall extensions X bookings and a overall. renewals, new second X XX deals, wins, XX including total customer Enterprise with quarter. of bookings sequentially XX deals which the were were up logos approximately X-figure for with in total

third of over signed $X of unions logos, new financial for be terms as the choice platform quarter, XXX,XXX trends, one X In services. we In assets and with credit a totaling large continues members to LivePerson billion.

a services South key a a and X-figure signed bank and including bank. Australian upsell partner-based African also We X and a with leading renewal, financial bank expansion [indiscernible] leading digital

banks logo TCV including X-year X-figure a largest of world's leverage X-figure and cruise new and recommitted to to park also mentioned amusement alongside and expanded adoption the of generative expansions upsell I AI capabilities business. conversational In to line early quarter, recently quarter, a an a fourth As leading the renewals a the LivePerson renewal, a win X-figure the one launched platform. a in third with entertainment and moment wider signing power signed marketplace ago, we

Notably, logo we continue see competition to strategic expansion wins including the strong and Google Genesys quarter, against and Salesforce, renewal, third new Cisco, Dialogflow. in against

in-person go-to-market on executive and build to to prospects. that the this have Looking cycle events note with our sales want accelerated historically I momentum. customers

people more Spark, and week, which conversational Next insights. on XX, we unveil LLM-powered X,XXX than at hybrid in-person virtual our new suite, which November report will our latest center, be will event analytics hosting called includes intelligence a we generate during a customer innovation, studio,

financials, want to quarter strategy our update I and Before moving to on partner provide its impact on on motion. our also an our third go-to-market

partners an leading CIOs solution enterprise channels, seamlessly capture like agent and couple providing This consumer from Microsoft engagements differentiated across AI source they across with Apple, by to customer are volumes key As AI, Meta, interactions. architecture. our to strategic automation orchestration AI and a the challenging like transformational open to build lets greater platform and LivePerson LivePerson's Google. enterprise, service the that the and for conversational Amazon, We cross-platform agnostic powerful flexible built our A,I, open is of capabilities develop partners initiatives drive platform to be suite. insights, and LivePerson orchestration enables brands

X we A our CDP open which launched the enables bank To partner second gained to quarter further closed partner with integration. drive personalization marketplace of large that extend new for meaningful which third-party deal quarter in the Salesforce when this the our engagements we X-figure platform, real-time via a the annual in momentum year. third integration, million proactive Marketing Cloud is expected bank. adopted a

and already revenue, [ which seeing millions adopted affinity monetize ] telco large in a we monthly is revenue-sharing a agreement. integration And our through incremental

digital the LivePerson In addition, and center alternative from are first contact for totaling positioning value. DPOs center innovative the who top architecture on consulting and are accelerate largest legacy in X providers operations. a X integrators In of services vendors an with as Australia's migration telcos, for partnered to voice-centric quarter, a not we to third systems CCaaS figures X programs global optimized as firm of AI-focused asynchronous

business international mentioned expanded And as partners. earlier, also their banks multiple leading through

momentum and investments fuel integrations continue plan to going to into and strategic in ecosystem, partner forward. trends market Given we growth partners our

financial quarter range. revenue our was third results, for total million As $XXX.X guidance of end at top the

non-GAAP expected we quarter, was gross approximately to of revenue, last contribution XX% from improved points XXX in margin the core high basis total discussed X-figure was reimbursement XX.X%. Medicare approximately and This quarter. a BXB recurring revenue As sequentially revenue $X value third million.

million expectations with EBITDA consistent landing our Adjusted guidance quarter, was the of $XX.X above last set we of range. midpoint the

from the hosted declined third Turning segments within to declined BXB total our for revenue reporting financial X% year-over-year. Revenue XX% year-over-year, quarter. revenue and for standard software

and declines down As lines, COVID-XX discussed Gainshare of of non-core primary in Gainshare the wind drivers prior these labor variable the pandemic-driven business revenue. quarters, including were testing,

these the for Claire driven changes, Normalizing revenue with declined existing XX% declined year-over-year, within core X% X%, upsells revenue while BXB Professional by engagement business quarter. year-over-year, driven completion core recurring by customers. JV revenue services grew hosted BXB first with the total of in the the

onetime declined Excluding driven last Claire by year. quarter the in professional a XX% major services revenue year-over-year fee revenue third JV, customer a telco from the of from

related consistent down revenue of of From XXX%, expectations. the of while primary these business Net revenue. revenue up Again, target international driver including XXX% retention to our perspective, below set but year-over-year, JV, variable revenue geographic U.S. sequentially, declined and labor to was the was previously Gainshare pandemic-driven Claire X%. XX% revenue declined a the lines, non-core wind with declines Gainshare range

in fourth JV. the to due to primarily revenue completing XX% the net million improvement Claire expect continue services RPO the for retention year-over-year engagement professional $XXX decreased We to sequential in quarter.

XX% part our customers. to quarter, driven the upsells in For from largest grew third ARPC $XXX,XXX by

quarter range range million full terms revenue maintaining expect from from $XXX the guidance, exclusive $XXX the midpoint contribution this in first narrowing $X.X we in XXXX million. million. year, to million Kasamba, of but revenue range we $XXX first from for inclusive $XXX quarter to to the the year of the of contribution of In revenue Kasamba million XXXX, $XXX million, is our This of are to

for total we to core expectations. equal of revenue recurring set previously approximately it As XX% BXB with revenue, consistent expect

quarter is to our but our narrowing in to the decline sequential quarter. range adjusted For $XX.X a is The onetime $XX.X range we in maintaining revenue attributable we in million. the reimbursement million, million for fourth of medical implication revenue $XX to to third are The $XX of recognized million. full $XX.X primarily midpoint the EBITDA, million year

BXB We fourth expect approximately core to equal XX% the in quarter. of total revenue recurring revenue

adjusted million for a $X expect EBITDA quarter, in to As range of $X million. the we fourth

our from quarter customers and to our cost people results this delivering them core effectively rightsized digital which Notably, in logo have investments strong consistent And is automation. meaningful Strategic capital by AI-powered renewals our enterprise as generative conclude, to drive wins, return last investment execution, today growth of reallocated another structure, to we and partner the system to return to discussed, channels our efficiently the have fourth of To BXB quarters. our demonstrate guidance. record quarter. prior voice with enabling meaningfully new profitability in platform. a and to on has legacy ship contributed expansions, in and X AI continuing interactions trend and

to forward, Looking the with entire digital for innovative accelerating for I line automation. can well we AI-powered the team, commitment are Q&A. work thanks meet Operator? we And LivePerson and transformation open customer positioned and think that, the demand to of

Operator

Co. from have & Ryan [Operator question MacDonald from Instructions] The comes Needham first we that

Ryan MacDonald

of I'm of competitive John, more the as the financial the the see new services sort curious, how verticals that this demand that's the seeing sort you evaluation telco some in and quarter about dynamic, hurting you solutions, some versus of of you comfort just look are nice in much you sort vertical at talked point? And good point think in do this being and phase. terms But just and helping as you or the across adoption for think to of . willingness at business the about of deals. AI within strength

John Collins

are we're we retaining I value business figures driving that economics I business We're logos and new year in remarks, partnership solely parties even third we generative that the that and because think and have of with from AI as related related Brian, are new and some to signing we capabilities new the real relation to of net expanding those that applications. the Yes. strategy of seeing have, the Generative with discussed prepared this are X relationships working directly in Genera.

. much testing this it's than So more just at stage.

Ryan MacDonald

-- next new terms the coming Super When veiling the week in next introduce expect suite rollout after and up the you suite to helpful. frame I'm here. should time And as of event sort maybe of for in . a the it we just new follow-up. hear new of interested week? about Spark the

John Collins

Yes.

at some We event. expect these the products be GA of to

be And generally and available see will can those in so again, how it to . an November. exciting customers time leverage

Operator

The we comes . from Evercore. question Levine next have from Peter

Peter Levine

one, from first or can seeing directionally here. . the us about John, you're the differs you talk Maybe below any maybe retention, mid-market even net to that gross how if and and enterprise retention

John Collins

Yes.

a We refocused have the lot enterprise of the that core business the is base. really ways essence in of core and on our

X-figure So thousands type of above and we're with talking seats. mid customers here kind of

business, resource strategically less As and we constraints. mid-market go to there, the down we have small lower market end given just of placed focus

in base or And the end lower GRR, that . enterprise. customer our so both are NRR at of

Peter Levine

you're gen around, you much the I products the it products is more of or ARPU higher the monetization as new it? know view guess is Curious this I where these versus are customers can market question actually reverse how your to think like tool an the -- how pricing is then going. from . Or you Ryan's how where customers? of would doing actually a competitive obviously, retention the follow-up get ARPU given AI landscape to Just And uplift? of these

John Collins

had for this the expanded mix extent, height some being NRR. some volume in mean met weren't discussed had some year, we've headwind necessarily expectations ago a very and hence, we've the that prior large pandemic of to It's or sure. renewed Yes. as X quarters, of the to that, I years during customers

see However, use those overall because to reaccelerate with starting compelling. AI, the customers generative volume are so we're their cases

response mentioned helping it's extent, in earlier I also So to question, some an it's regard. in as that net new to driving But business.

is agent that's end form And facing internal new productivity that summarization. use of the like copilot cases on increase the the but volume also internal so taking to customer, platform and

Peter Levine

And -- to start I you see directionally, know kind in. I see when Perfect. out final reacceleration? guided we if one model the could . and does But squeeze 'XX. haven't trough X of can to calendar revenue

John Collins

Yes. I Obviously, expect February. to been we the metrics continue. call sequentially on and trend back beginning though, to X we'll when improving XXXX that print think fourth of speaking to quarters, more share a this to see momentum quarter Broadly come have in over . have general last the market. I in on go rebuild the we're Clearly, and that

Operator

next we . Cummins question comes have Zach Instructions] The B. from [Operator from Riley Securities.

Zach Cummins

for some EBITDA likely Can us have you QX just walk through know again some curious of for I to revenue payments that both just and QX, but guidance. assumptions are going on assumptions your occurring revenue adjusted in Medicare the not guidance? be .

John Collins

Yes.

come Medicare small we amount, worth fourth some million may $X $X So have additional the to of potentially million payments that quarter. through do in

most And is season then for customers. of We quarter, also peak are services engagements. fourth typical in the timing it the certain monitoring professional as delivery our larger of is

reserves we season, that speaking. tend conservatively during so And peak to have higher

We very don't into reason some over given general those stability conservatism trend, trend as improving sequentially necessarily high but time, the and wider reserves, have . being range we of range expect there's the the But that for there. built well. a

Zach Cummins

managing I And Understood. over line know How are the of thinking last know the line several see done about few of a around rationalizing the just there was kind in margins potential a great costs you question the in to next I quarters. the a top business. of trough really time job quarters? here you've

profitability G&A on your strong approach . side? some to the maybe the in invest versus is to you've demand that what continuing So seen of balancing

John Collins

Yes.

restructuring non-core we've the event. of of in lines, behind since culminating done that QX is hard of most had a QX the we've And right? down now. We've essentially large XXXX, XXXX wound a think ongoing work, I and us business

we're mentioned we're continue. think terms that in guide profitability to last we to I to expect as it's top important quarters cost X that to to and understand And I ready that line good before, had So position we've try think I structure of over improvement while the growth. a improve in XXXX, sequential through the not

So on I to lot profitability. and drive the we're after cost is . broadly think reasonable work speaking, core line top in a the of refocused improve hard to a structure place now

Operator

comes Schappel question The have Loop from Capital final we from . Mark Markets.

Mark Schappel

over could give was earlier I just wondering on you particularly us if and is you how force the John, year. sales progressing the brief changes a here, strategy the restructuring update think past given

John Collins

and to fourth the entering some call, pipeline third count these I ramped carrier in relative quota quota quarter head holding last qualified the carriers quarter. had all We're what alluded entering flat, increased quarter-over-quarter. are seeing, the We're to Yes. we as

speaking, services momentum. And that prepared indicators of And I financial the broadly terms adding trends both go-to-market within of there's ecosystem, that in impact. that is our we're also in some but partner in so rebuilding remarks, highlighted which tangible

think speaking, I broadly So is productivity improving.

marketing is than the and slightly entering with efficiency slightly spend pipeline well, did Our improving more we quarter have again, we -- respect fourth entering the third. as to

positive indicators here. are So .

Mark Schappel

Great. And of days. less focus a WildHealth I these realize is

just wondering general So business us the update quarter was your if the I . thoughts how give and could view business. an on just you you on in that

John Collins

Yes.

have a growth, expectation is is . the XXXX, has and first set WildHealth with early stand-alone provided the basis remain strategic the moderated very which had previously, run its consistent we on what previously valuable for time. when relative I discussed launched quarter. we necessarily we to had we've in a expectations but WildHealth to further year but to last this at core updates not I asset don't beyond LivePerson As

Operator

. Group. The from have Van Jeff we next Capital question comes Rhee Craig-Hallum from

Jeff Van Rhee

highly what margin a question business? a of impact are tail about margin WildHealth, margins What the from gross was somewhat you I questions. that . guess revenue. the And is, how to was on One, that imagine for just then that was QX? gross thinking profitable on John, option X

John Collins

Yes, Jeff.

-- the the we of all expense. that have recap, as just occur expense took in don't And QX. for we So that didn't the QX, you to in -- Medicare revenue WildHealth-based

result as a is $X which there non-GAAP margins clearly quarter. recognized a of in So third million gross Medicare bump to the reimbursement, onetime that we

X the margin for gross moved points. to by up that X So needle

the So XX% fourth margin be it a WildHealth broadly gross expect on would contribution. for in as independent about . within we we business the the normalized to that of XX% basis, think quarter,

Jeff Van Rhee

XXX%? on then Where Is it is And retention, helpful. I they're Just why Very you're now? usage? where you leaving? where a how just to the Okay. going are retention, are Maybe customers XXX% on less are going are the if that bit. where expand mean, a you to goal XXX%. just little know XXX% are, we're expansion the I below and close why maybe . we on you

John Collins

Yes.

lot to fortunately, wind just mentioned lot I are a for we're moment. of a where go-to-market are think rebuilding previously. A and and why we of relates lot the defocusing think positive, I tool and of of isn't motion, indicators as now, I me non-core rearview reasons at the are it the and we the restructuring down that

and end NRR of mid-market the of those we're includes at end market elsewhere. think putting we To be now more pandemic support specific, renewing moving of a we're of volumes customers of are the that expectations full service. relates is some that mentioned the the from some really moment. lower coming on lot lower to which cancellations lot the regard of blended question I the rather And earlier, lower the moving to here, the then NRR reporting not than relation as forward, I forecast with there a to a where in headwind off are that

not we rate customer And though, base, much the blended so be were closer, we sequential but that improvement still NRR moving that to range if within below isolate that have, target. is wider we expect . XXX% would forward. enterprise the if Again, the

Jeff Van Rhee

through way levels for percent How the follow-up quantify that there consuming contracts volume we? X of as are on far to transition And like what opposed to of to I is mean, volume the actually are just rational post-pandemic pandemic? what resets. reset a the they're volumes

John Collins

transition think first by I second of quarter year, next Jeff. fully we'll that or be through

Jeff Van Rhee

to then I call, sorry. know since bookings year that How bookings a last to Okay. X And was do early quarter, bookings, were continue caught the relative post to and was this just last just is you're Or expect could a to bigger know you if deals? Do that question, this said I up reverse? it said you to I the multipart the but customer down. believe, think I you it relative on best expectations I number. sequentially -- it's quarter quarter, this one, 'XX. going If count going and On from earlier, you that's

John Collins

clarifications. of Yes. A couple

values were So in said actually enterprise overall prepared the with approximately sequentially. that quarter. I up bookings were remarks, last consistent consistent -- deal But

were counts, despite overall emphasizing strategic same. . did So enterprise on sequentially the focus deal base, the customer our ACV lower we increase approximately bookings again, the while

Operator

Ladies and joining our of gentlemen, we have call reached us. the for you Thank today. end

lines. disconnect may now You your

LivePerson (LPSN) 8 Nov 232023 Q3 Earnings call transcript