NASDAQ:LPSN LivePerson Q2 2024 Earnings Report $0.87 -0.01 (-1.14%) As of 04:00 PM Eastern Earnings HistoryForecast LivePerson EPS ResultsActual EPS-$0.74Consensus EPS -$0.16Beat/MissMissed by -$0.58One Year Ago EPSN/ALivePerson Revenue ResultsActual Revenue$79.88 millionExpected Revenue$77.62 millionBeat/MissBeat by +$2.26 millionYoY Revenue GrowthN/ALivePerson Announcement DetailsQuarterQ2 2024Date7/31/2024TimeN/AConference Call DateWednesday, July 31, 2024Conference Call Time5:00PM ETUpcoming EarningsLivePerson's Q1 2025 earnings is scheduled for Wednesday, May 7, 2025, with a conference call scheduled at 5:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by LivePerson Q2 2024 Earnings Call TranscriptProvided by QuartrJuly 31, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the LivePerson's Second Quarter 2024 Earnings Conference Call. My name is Irene, and I will be your conference operator today. At this time, all participants are in a listen only mode. Operator00:00:17After the prepared remarks, the management team from live person will conduct a question and answer session and conference participants will be given instructions at that time. To give everyone the opportunity to participate, As a reminder, this conference is being recorded. I would now like to turn the conference call over to Mr. John Paracchio, Senior Director of Investor Relations. Please go ahead. Speaker 100:00:46Thank you, Irene. Joining me on today's call is John Sabino, CEO and John Collins, CFO and COO. Please note that during today's call, we will make forward looking statements, which are predictions, projections and other statements about future results. These statements are based on our current expectations and assumptions as of today, July 31, 2024, and are subject to risks and uncertainties. Actual results may differ materially due to various factors, including those described in today's earnings press release and in the comments made during this conference call, as well as in 10ks, 10 Qs and other reports we filed with the SEC. Speaker 100:01:24We assume no obligation to update any forward looking statements. Also during this call, we'll discuss certain non GAAP financial measures. A reconciliation of GAAP to non GAAP financial measures is included in today's earnings press release. Both the press release and the supplemental slides, which include highlights for the quarter, are available on the Investor Relations section of LivePerson's website atir.liveperson.com. With that, I'll turn the call over to LivePerson's CEO, John Sabino. Speaker 200:01:53Thank you so much, John. Thank you all for joining us today. Before providing a detailed update on our business and strategy, let me briefly touch on where we are today and what we have delivered since our last earnings call in May. On our last call, we reiterated that addressing our 2026 convertible notes remained a key priority. We have since announced our deal with Lynn Rock Lake, which closed in early June. Speaker 200:02:20This transaction has significantly improved our capital structure and has given our customers and partners confidence that LivePerson will be a long term strategic partner. Moving on to conversations with customers, I have now met with over 200, doubling from the time of our last call. And I continue to hear that they value our product and want to partner with us in their digital transformation. I've also heard from Select Group that we have an opportunity to serve them better, validating our focus on customer success, which has contributed to improve with added rigor and process installed over the past 2 quarters. Customers have also expressed their excitement about our strategic partnership with Avaya, which I am pleased to report is on track with addressable opportunities building in the pipeline. Speaker 200:03:09More importantly, customers are excited about our pivot to embrace voice and omni channel, which aligns with our strategy to improve our go to market motion with strategic voice partners and other strategic partnerships. Supporting our activity with customers and partnerships, we've also been able to roll out new pricing and packaging as GA well ahead of schedule, which I will discuss in greater detail later on the call. Finally, I want to acknowledge Sandy Hogan joining LivePerson as our new Chief Revenue Officer, who started in early June. With decades of go to market experience and a proven track record of driving significant growth, I cannot wait to see what she will bring to LivePerson. With our go to market leadership team in place, our commercial organization is in position to execute on expansion and retention as well as driving new business. Speaker 200:04:02Now that I've shared that summary of our progress since our last call, let me update you briefly on our 2nd quarter results. Revenue in the 2nd quarter was $79,900,000 at the high end of our guidance range, mainly driven by successful efforts to retain at risk customers during the quarter. And adjusted EBITDA was $8,200,000 above the high end of our guidance range, largely as a result of the actions the company has taken to reduce costs. John Collins will provide more detail on financial results in his section, but I wanted to reiterate that we achieved what we set out to do in 2nd quarter and that these results and the maintenance of our full year guidance represents a 2nd consecutive quarter of execution on our strategy. Now I would like to provide more detail on our progress in the 3 key focus areas of our transformation strategy. Speaker 200:04:54First is our capital structure. As discussed earlier, in the Q2, we completed the first step in addressing our 2026 notes, which increased confidence with our customers who are renewing and expanding their business with us. Prior to this transaction, some of our largest customers raised concerns about LivePerson's viability as a long term partner. But since the transaction was announced, customers have expressed confidence in strategically partnering with us, which has enabled key renewals. These included 2 of the largest companies in the world, one renewal being in excess of 8 figures, and one of the top investment banks in the world. Speaker 200:05:36We have a long way to go to systemically address our new challenges, but these renewals are a step in the right direction. 2nd, let me update you on our go to market motion. As I've already discussed, the announcement of the transaction back in May has removed a significant hurdle in our go to market motion. In addition, the operational improvements put in place with customer success are increasingly providing more value. The rigorous structure in forecasting has allowed us to be more strategic in the application of adoption frameworks and maturity models for our enterprise customers. Speaker 200:06:12These frameworks are purpose built to deliver the highest return on investment by driving increased usage and adoption of the broader capabilities of our platform, including the ability to orchestrate several LLMs across BUs, use cases and vendors. Highlighted earlier, our new pricing and packaging was launched GA on June 18 months ahead of schedule. The new pricing and packaging is extremely simple and streamlined with good, better and best packages that showcase our innovation. Services have been bundled into the price along with platform capabilities such as analytics and integrations. Unlike most other vendors, Live Person now only has 2 pricing meters with almost no add on costs. Speaker 200:06:56The contracts are easy to scope with no surprises. It also allows brands to bring their own LLMs and 3rd party AI without incurring additional cost. In part, thanks to this new pricing model, alongside our strong product capabilities, we were able to win back and expand a major healthcare provider. This customer found that our straightforward all inclusive pricing structure provided significant value and faster scaling. We expect this momentum to continue in future quarters. Speaker 200:07:28I would now like to update you on our partner strategy. We have had dozens of enterprise brands leaning into our vision for a unified omnichannel workspace that integrates LivePerson with best in class voice solutions like Avaya. But by unifying the agent workspace, analytics and AI within the Conversational Cloud, LivePerson becomes the single pane of glass for brands as they navigate their voice to digital transformation. We anticipate a GA release of these capabilities by the end of Q3 and a rapid expansion of functionality and partnerships with more integrated CCaaS vendors that come in the following quarters. This brings me to our 3rd area of focus, extending our advantage in product integration and orchestration. Speaker 200:08:17Today, we have over 70 customers paying for generative AI, including 23 of our top 100 customers. The number of customers who have adopted generative AI has grown 20% since last quarter. Additionally, in the last quarter, we have powered over 6,000,000 conversations with our generative AI capabilities, which is up over 165% quarter over quarter. Unlike legacy chatbot systems, which struggle with complex conversations and they often sound robotic, LivePerson's generative AI bots engage in a sophisticated personalized interaction that drive business outcomes and helps agents provide better customer service. Our customers using LivePerson's generative AI capabilities report seeing higher customer satisfaction and improved operational efficiency. Speaker 200:09:06In the last quarter, the adoption of LivePerson's generative AI capabilities has grown significantly. And the highlights include a leading North American telecommunications provider deploying our AI co pilot to now over 7,000 agents, a major European telecommunications provider reducing average response times by 7 minutes and improving their Net Promoter Score by 5 points. Another is a large retailer utilizing LivePerson's AI to cut operational costs by 60% and a top 10 U. S. Credit union lowering their average response times by 20%. Speaker 200:09:44These results show that generative AI is getting deployed throughout our customer base globally because it's driving real world results. We also continue our track record of product innovation at our Spark Conference in May. During this event, we introduced several new AI innovations designed to deliver better customer experiences and increased operational efficiencies. Highlights from the event included bringing your own LLM, which allows brands to integrate their own large language models from Google, Amazon and OpenAI and others with the LivePerson. CoPilot rewrite, which refines agent messages for clarity and professionalism, helping agents achieve exceptional customer experience. Speaker 200:10:28We have generative AI routing agents that accurately understand customer needs and efficiently routes them to the appropriate resource, whether that be a bot or a human agent. And we've created data collection agents, which effectively gather information from customers making the data collection process more efficient and accurate. The innovations launched at Spark will help our customers remain at the forefront of generative AI in customer care. Over the next several quarters, the innovation coming from LivePerson will continue our focus on building more AI agents, improving AI Copilot and integrating voice into the live person agent workspace. Before handing this call to John Collins, I want to reiterate that we are continuing to execute a multi quarter turnaround that will take time to see the long term results. Speaker 200:11:19I want to thank the LivePerson team for their strong commitment and the rapid execution on the transformation strategy that we've laid out in February. We continue to deliver the expectations we set by improving our capital structure and continuing to make strides in go to market by adding new leadership, launching new pricing and packaging and advancing our partnerships with Avaya and others. We have also continued to increase our strengths in our product with exciting solutions to drive incremental value as we work with our customers to deliver their digital first future. I look forward to continuing to update you on our progress in the quarters to come. Now let me pass this call to our CFO and COO, John Collins. Speaker 200:12:01John? Speaker 300:12:03Thanks, John. I'll begin with a brief operational update followed by a discussion of our financial performance and guidance. As previously announced, following the May earnings call, we closed the transaction with our largest note holder, LinRock Litt. That significantly improved our capital structure by enabling us to capture some of the discounted current market price of our 20 26 convertible notes, extend debt maturity schedules and raise new capital to facilitate further deleveraging. With a stronger balance sheet, we are better positioned to meet the needs of our customers and partners for the long run and to accelerate value creation for shareholders. Speaker 300:12:36To this end, as John alluded to, the transaction with Interac Ready reinforced customer confidence to renew and expand business with us in the Q2. I would also like to provide a brief update on Wild Health. In the Q2, we divested Wild Health, consistent with the expectations we set previously. Because the business was operating at a significant loss, the timing of this divestiture was accretive to earnings, stating an estimated $3,000,000 to $5,000,000 in full year expenses, which we previously accounted for in guidance. Note that LivePerson did not retain any interest in or obligations to Wild Health, which materially limits the potential for liabilities tied to future patient clearance. Speaker 300:13:16In terms of deals and significant customer wins in the 2nd quarter, we continue to build momentum. We signed over 37 deals, including 9 new logos and 28 expansions and renewals. While the number of deals was down 8% from the Q1, the value of these deals was up 58% sequentially. Expansions and renewals included a 7 figure upsell with a global financial services company and an upsell with a global audio streaming company. New logo wins included a large New Zealand based telecommunications company and a large U. Speaker 300:13:49S. Mortgage company. As for Q2 financial results, total revenue was $79,900,000 at the high end of our guidance range, driven primarily by lower than expected customer churn. Wild Health contributed $1,100,000 to total revenue in the Q2. With the divestiture of Wild Health, we do not expect any revenue or cost impact going forward, which was reflected in our prior guidance. Speaker 300:14:14Adjusted EBITDA for the Q2 was above our guidance range at $8,200,000 driven primarily by a one time benefit from a vendor settlement and higher than expected revenue. Revenue from B2B hosted services was $67,300,000 down 17% year over year. B2B core recurring revenue was $74,000,000 down 18% year over year, driven by customer cancellations and down sales that we discussed in the Q1. Professional services revenue was $12,600,000 down 23% year over year, driven primarily by the same factors impacting revenues in hosted services. From a geographic perspective, U. Speaker 300:14:51S. Revenue was $57,300,000 and international revenue was $22,600,000 or 72% and 28% of total revenue, respectively. Average revenue per customer was $630,000 up 10%, driven in part by expansions with our largest customers and also by customer churn. RPO declined 13% sequentially to $283,000,000 driven again by the same factors underlying the decline in revenue. Net revenue retention was 83% in the 2nd quarter compared to 89% in the 1st quarter. Speaker 300:15:24As previously discussed, NRR is a lagging indicator of progress on our strategy due to it being a function of in period revenue. Given the size and timing of cancellations in the first half, we continue to expect revenue to decline sequentially through this year to Q4 as the full year impact of this customer churn is realized. In contrast to NRR, we view new annual recurring revenue that is the net of annualized bookings and annualized churn as a leading indicator of progress on our strategy. While still a negative value in the 2nd quarter, new ARR improved from the Q1 to the 2nd quarter and we continue to expect further improvement in the Q3. Finally, in terms of cash, we ended the 2nd quarter with $146,000,000 of cash on the balance sheet, inclusive of the proceeds net of transaction costs from the previously announced transaction with Lunera Waste. Speaker 300:16:17In terms of guidance for the Q3, we expect revenue to be in the range of $69,000,000 to 73,000,000 This is a sequential decline of approximately $9,000,000 at the midpoint, which as discussed is primarily driven by customer cancellations and down sells in the first half and to a lesser extent the divestiture of Wild Health. B2B core recurring revenue is expected to be approximately 92% of total revenue in the 3rd quarter. As for adjusted EBITDA in the 3rd quarter, we expect a range of $0,000,000 to $5,000,000 The sequential step down in adjusted EBITDA is driven almost entirely by the sequential step down in revenue. For the full year, we are maintaining our revenue guidance range of $300,000,000 to $315,000,000 As for B2B core recurring revenue, consistent with the Q3, we expect it to be approximately 92% of total revenue for the full year. Finally, we are also maintaining our adjusted EBITDA guidance at a range of $15,000,000 to $26,000,000 and we continue to expect the B2B business to be free cash flow positive for the full year. Speaker 300:17:22Before taking questions, I'd like to briefly summarize the progress we've made on our strategy during the prior two quarters. We've significantly reduced our cost structure and completed the wind down or divestiture of all non core business lines, focusing the business and bringing it one step closer to sustainable generation of cash flow. We've onboarded a CCO and a CRO who are accelerating the rebuild of our commercial operations. We've closed a transaction with our largest note holder that reduced our debt, extended maturities and raised capital to facilitate further deleveraging, giving customers the confidence to continue renewing and expanding business with us. Collectively, this progress coupled with ongoing investment into voice integrations and related partners strengthened LivePerson's foundation. Speaker 300:18:06We expect continued execution of our strategy to reinforce confidence in LivePerson as a trusted strategic partner for the voice to digital transformation of enterprise customer service. And with that, I'll pass the call back to the operator for questions. Operator00:18:27Thank you. We will now be conducting a question and answer The first question we have is John Van Rhee of Craig Hallum. Please go ahead. Speaker 400:19:07Hi, guys. Couple for me. So just maybe if you'd start and either of the Johns, I guess, take your pick. But on the net new ARR, just expand a bit more on bookings and churn relative to expectations in the quarter. I heard mentioned in passing, but I'm trying to deconstruct there. Speaker 400:19:26The churn meet expectations, was churn a bit higher than expectations? I think I heard you say the bookings were ahead, but just retouch on that for a second if you would. Speaker 300:19:35Yes, Jeff, I'll start here. Broadly speaking, we were a little better on churn than we previously expected. And on the new deals, while we were up 58% sequentially, that was a little lower than what we had previously expected. All in all though, new ARR improving considerably from the Q1 to the second. Speaker 400:19:56And on the new deal front, is talk about I mean, obviously, there's some changes going on in new CRO. You're obviously pushing harder into partners. But with respect to the direct sales motion and win rates you're seeing, just talk a bit about the observation over the last 6 months and how that's trending? Yes. Speaker 200:20:16I'll start, John, and if you want to add more detail, please feel free. So when it comes to new business, part of the reason we brought in Sandy Hogan is really to improve that partner motion and to rebuild our ability to acquire new logos. And it's also a structural improvement with pricing and packaging so that we can be more competitive. So the win rate has actually improved quarter over quarter. We still have some ways to go and it's going to take a few quarters for Sandy to fully ramp it up. Speaker 200:20:48But the initial indications is that quicker rollout of pricing and packaging, engaging with our customers with a stronger CS motion and some of the new capabilities that we're releasing on the A front are attractive to new logos and we're looking to see further improvement there and the win rate has been improving quarter over quarter. Speaker 400:21:12That's helpful. And on the churn, you said it was a bit better than expected. I know you're rolling out new pricing in packaging, but seems I think that just hit. So just curious what you would attribute the improved churn to? Speaker 200:21:26The improvement? John, I'll jump on that one too. Again, feel free to add some extra commentary here. So this goes back to the initial conversation that we're having, Jeff, with having to improve on exactly how we engage with customers getting additional value out of the platform. We spoke about being able to use more of what LivePerson offers versus just isolated use cases or messaging in and unto itself. Speaker 200:21:53So all of these motions now have had a few months to move forward with our CS organization. We spoke about the frameworks and conversational value paths that we use with customers to do that. So the improvements that we're seeing in retention really is being driven by some of the additional value that we're seeing being driven by our AI capabilities, opening up more of our portfolio to customers and the activities that Kevin Meeks is driving with our CS organization. And of course, the transaction with LinRock Lake is also playing into this as well. I think it removed some of the concern customers may have had in strategically partnering with us longer term. Operator00:22:42Thank you. With that, we have reached the end of theRead morePowered by Conference Call Audio Live Call not available Earnings Conference CallLivePerson Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) LivePerson Earnings HeadlinesLivePerson to Announce First Quarter 2025 Financial Results on May 7, 2025 | LPSN Stock NewsApril 23, 2025 | gurufocus.comLivePerson to Announce First Quarter 2025 Financial Results on May 7, 2025April 23, 2025 | prnewswire.comM.A.G.A. is Finished – This Could be even BetterYou’ve no doubt heard Trump’s rally cry: Make America Great Again. But recently the President made a big change. Make America Wealthy Again (M.A.W.A).April 30, 2025 | Paradigm Press (Ad)LivePerson Reports Inducement Grants Under NASDAQ Listing Rule 5635(c)(4)April 11, 2025 | gurufocus.comLivePerson Reports Inducement Grants Under NASDAQ Listing Rule 5635(c)(4) | LPSN Stock NewsApril 11, 2025 | gurufocus.comLivePerson Reports Inducement Grants Under NASDAQ Listing Rule 5635(c)(4)April 11, 2025 | prnewswire.comSee More LivePerson Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like LivePerson? Sign up for Earnings360's daily newsletter to receive timely earnings updates on LivePerson and other key companies, straight to your email. Email Address About LivePersonLivePerson (NASDAQ:LPSN) engages in conversational artificial intelligence. It enables brands to leverage the Conversational Cloud's intelligence engine to connect with consumers through an integrated suite of mobile and online business messaging technologies. The company offers the Conversational Cloud, an enterprise-class digital customer conversation platform, which enables businesses and consumers to connect through conversational channels, such as voice, in-app, and mobile messaging. It also provides professional services; LivePerson's Conversational AI, including conversation builder, manager, and intelligence, and intent manager. In addition, it provides Voice AI, conversational intelligence and insights, and integration services. The company sells its products to Fortune 500 companies, Internet businesses, online merchants, automotive dealers, educational institution, public sector, and not-for-profit organizations. It operates in the United States, Canada, Latin America, South America, Europe, the Middle East, Africa, the United Kingdom, and the Asia-Pacific. LivePerson, Inc. was incorporated in 1995 and is headquartered in New York, New York.View LivePerson ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon's Earnings Will Make or Break the Stock's Comeback CrowdStrike Stock Nears Record High, Dip Ahead of Earnings?Alphabet Rebounds After Strong Earnings and Buyback AnnouncementMarkets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Texas Instruments: Earnings Beat, Upbeat Guidance Fuel RecoveryMarket Anticipation Builds: Joby Stock Climbs Ahead of Earnings Upcoming Earnings Airbnb (5/1/2025)Apple (5/1/2025)Amazon.com (5/1/2025)Amgen (5/1/2025)Linde (5/1/2025)MercadoLibre (5/1/2025)Monster Beverage (5/1/2025)Strategy (5/1/2025)Atlassian (5/1/2025)Arthur J. Gallagher & Co. (5/1/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 5 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the LivePerson's Second Quarter 2024 Earnings Conference Call. My name is Irene, and I will be your conference operator today. At this time, all participants are in a listen only mode. Operator00:00:17After the prepared remarks, the management team from live person will conduct a question and answer session and conference participants will be given instructions at that time. To give everyone the opportunity to participate, As a reminder, this conference is being recorded. I would now like to turn the conference call over to Mr. John Paracchio, Senior Director of Investor Relations. Please go ahead. Speaker 100:00:46Thank you, Irene. Joining me on today's call is John Sabino, CEO and John Collins, CFO and COO. Please note that during today's call, we will make forward looking statements, which are predictions, projections and other statements about future results. These statements are based on our current expectations and assumptions as of today, July 31, 2024, and are subject to risks and uncertainties. Actual results may differ materially due to various factors, including those described in today's earnings press release and in the comments made during this conference call, as well as in 10ks, 10 Qs and other reports we filed with the SEC. Speaker 100:01:24We assume no obligation to update any forward looking statements. Also during this call, we'll discuss certain non GAAP financial measures. A reconciliation of GAAP to non GAAP financial measures is included in today's earnings press release. Both the press release and the supplemental slides, which include highlights for the quarter, are available on the Investor Relations section of LivePerson's website atir.liveperson.com. With that, I'll turn the call over to LivePerson's CEO, John Sabino. Speaker 200:01:53Thank you so much, John. Thank you all for joining us today. Before providing a detailed update on our business and strategy, let me briefly touch on where we are today and what we have delivered since our last earnings call in May. On our last call, we reiterated that addressing our 2026 convertible notes remained a key priority. We have since announced our deal with Lynn Rock Lake, which closed in early June. Speaker 200:02:20This transaction has significantly improved our capital structure and has given our customers and partners confidence that LivePerson will be a long term strategic partner. Moving on to conversations with customers, I have now met with over 200, doubling from the time of our last call. And I continue to hear that they value our product and want to partner with us in their digital transformation. I've also heard from Select Group that we have an opportunity to serve them better, validating our focus on customer success, which has contributed to improve with added rigor and process installed over the past 2 quarters. Customers have also expressed their excitement about our strategic partnership with Avaya, which I am pleased to report is on track with addressable opportunities building in the pipeline. Speaker 200:03:09More importantly, customers are excited about our pivot to embrace voice and omni channel, which aligns with our strategy to improve our go to market motion with strategic voice partners and other strategic partnerships. Supporting our activity with customers and partnerships, we've also been able to roll out new pricing and packaging as GA well ahead of schedule, which I will discuss in greater detail later on the call. Finally, I want to acknowledge Sandy Hogan joining LivePerson as our new Chief Revenue Officer, who started in early June. With decades of go to market experience and a proven track record of driving significant growth, I cannot wait to see what she will bring to LivePerson. With our go to market leadership team in place, our commercial organization is in position to execute on expansion and retention as well as driving new business. Speaker 200:04:02Now that I've shared that summary of our progress since our last call, let me update you briefly on our 2nd quarter results. Revenue in the 2nd quarter was $79,900,000 at the high end of our guidance range, mainly driven by successful efforts to retain at risk customers during the quarter. And adjusted EBITDA was $8,200,000 above the high end of our guidance range, largely as a result of the actions the company has taken to reduce costs. John Collins will provide more detail on financial results in his section, but I wanted to reiterate that we achieved what we set out to do in 2nd quarter and that these results and the maintenance of our full year guidance represents a 2nd consecutive quarter of execution on our strategy. Now I would like to provide more detail on our progress in the 3 key focus areas of our transformation strategy. Speaker 200:04:54First is our capital structure. As discussed earlier, in the Q2, we completed the first step in addressing our 2026 notes, which increased confidence with our customers who are renewing and expanding their business with us. Prior to this transaction, some of our largest customers raised concerns about LivePerson's viability as a long term partner. But since the transaction was announced, customers have expressed confidence in strategically partnering with us, which has enabled key renewals. These included 2 of the largest companies in the world, one renewal being in excess of 8 figures, and one of the top investment banks in the world. Speaker 200:05:36We have a long way to go to systemically address our new challenges, but these renewals are a step in the right direction. 2nd, let me update you on our go to market motion. As I've already discussed, the announcement of the transaction back in May has removed a significant hurdle in our go to market motion. In addition, the operational improvements put in place with customer success are increasingly providing more value. The rigorous structure in forecasting has allowed us to be more strategic in the application of adoption frameworks and maturity models for our enterprise customers. Speaker 200:06:12These frameworks are purpose built to deliver the highest return on investment by driving increased usage and adoption of the broader capabilities of our platform, including the ability to orchestrate several LLMs across BUs, use cases and vendors. Highlighted earlier, our new pricing and packaging was launched GA on June 18 months ahead of schedule. The new pricing and packaging is extremely simple and streamlined with good, better and best packages that showcase our innovation. Services have been bundled into the price along with platform capabilities such as analytics and integrations. Unlike most other vendors, Live Person now only has 2 pricing meters with almost no add on costs. Speaker 200:06:56The contracts are easy to scope with no surprises. It also allows brands to bring their own LLMs and 3rd party AI without incurring additional cost. In part, thanks to this new pricing model, alongside our strong product capabilities, we were able to win back and expand a major healthcare provider. This customer found that our straightforward all inclusive pricing structure provided significant value and faster scaling. We expect this momentum to continue in future quarters. Speaker 200:07:28I would now like to update you on our partner strategy. We have had dozens of enterprise brands leaning into our vision for a unified omnichannel workspace that integrates LivePerson with best in class voice solutions like Avaya. But by unifying the agent workspace, analytics and AI within the Conversational Cloud, LivePerson becomes the single pane of glass for brands as they navigate their voice to digital transformation. We anticipate a GA release of these capabilities by the end of Q3 and a rapid expansion of functionality and partnerships with more integrated CCaaS vendors that come in the following quarters. This brings me to our 3rd area of focus, extending our advantage in product integration and orchestration. Speaker 200:08:17Today, we have over 70 customers paying for generative AI, including 23 of our top 100 customers. The number of customers who have adopted generative AI has grown 20% since last quarter. Additionally, in the last quarter, we have powered over 6,000,000 conversations with our generative AI capabilities, which is up over 165% quarter over quarter. Unlike legacy chatbot systems, which struggle with complex conversations and they often sound robotic, LivePerson's generative AI bots engage in a sophisticated personalized interaction that drive business outcomes and helps agents provide better customer service. Our customers using LivePerson's generative AI capabilities report seeing higher customer satisfaction and improved operational efficiency. Speaker 200:09:06In the last quarter, the adoption of LivePerson's generative AI capabilities has grown significantly. And the highlights include a leading North American telecommunications provider deploying our AI co pilot to now over 7,000 agents, a major European telecommunications provider reducing average response times by 7 minutes and improving their Net Promoter Score by 5 points. Another is a large retailer utilizing LivePerson's AI to cut operational costs by 60% and a top 10 U. S. Credit union lowering their average response times by 20%. Speaker 200:09:44These results show that generative AI is getting deployed throughout our customer base globally because it's driving real world results. We also continue our track record of product innovation at our Spark Conference in May. During this event, we introduced several new AI innovations designed to deliver better customer experiences and increased operational efficiencies. Highlights from the event included bringing your own LLM, which allows brands to integrate their own large language models from Google, Amazon and OpenAI and others with the LivePerson. CoPilot rewrite, which refines agent messages for clarity and professionalism, helping agents achieve exceptional customer experience. Speaker 200:10:28We have generative AI routing agents that accurately understand customer needs and efficiently routes them to the appropriate resource, whether that be a bot or a human agent. And we've created data collection agents, which effectively gather information from customers making the data collection process more efficient and accurate. The innovations launched at Spark will help our customers remain at the forefront of generative AI in customer care. Over the next several quarters, the innovation coming from LivePerson will continue our focus on building more AI agents, improving AI Copilot and integrating voice into the live person agent workspace. Before handing this call to John Collins, I want to reiterate that we are continuing to execute a multi quarter turnaround that will take time to see the long term results. Speaker 200:11:19I want to thank the LivePerson team for their strong commitment and the rapid execution on the transformation strategy that we've laid out in February. We continue to deliver the expectations we set by improving our capital structure and continuing to make strides in go to market by adding new leadership, launching new pricing and packaging and advancing our partnerships with Avaya and others. We have also continued to increase our strengths in our product with exciting solutions to drive incremental value as we work with our customers to deliver their digital first future. I look forward to continuing to update you on our progress in the quarters to come. Now let me pass this call to our CFO and COO, John Collins. Speaker 200:12:01John? Speaker 300:12:03Thanks, John. I'll begin with a brief operational update followed by a discussion of our financial performance and guidance. As previously announced, following the May earnings call, we closed the transaction with our largest note holder, LinRock Litt. That significantly improved our capital structure by enabling us to capture some of the discounted current market price of our 20 26 convertible notes, extend debt maturity schedules and raise new capital to facilitate further deleveraging. With a stronger balance sheet, we are better positioned to meet the needs of our customers and partners for the long run and to accelerate value creation for shareholders. Speaker 300:12:36To this end, as John alluded to, the transaction with Interac Ready reinforced customer confidence to renew and expand business with us in the Q2. I would also like to provide a brief update on Wild Health. In the Q2, we divested Wild Health, consistent with the expectations we set previously. Because the business was operating at a significant loss, the timing of this divestiture was accretive to earnings, stating an estimated $3,000,000 to $5,000,000 in full year expenses, which we previously accounted for in guidance. Note that LivePerson did not retain any interest in or obligations to Wild Health, which materially limits the potential for liabilities tied to future patient clearance. Speaker 300:13:16In terms of deals and significant customer wins in the 2nd quarter, we continue to build momentum. We signed over 37 deals, including 9 new logos and 28 expansions and renewals. While the number of deals was down 8% from the Q1, the value of these deals was up 58% sequentially. Expansions and renewals included a 7 figure upsell with a global financial services company and an upsell with a global audio streaming company. New logo wins included a large New Zealand based telecommunications company and a large U. Speaker 300:13:49S. Mortgage company. As for Q2 financial results, total revenue was $79,900,000 at the high end of our guidance range, driven primarily by lower than expected customer churn. Wild Health contributed $1,100,000 to total revenue in the Q2. With the divestiture of Wild Health, we do not expect any revenue or cost impact going forward, which was reflected in our prior guidance. Speaker 300:14:14Adjusted EBITDA for the Q2 was above our guidance range at $8,200,000 driven primarily by a one time benefit from a vendor settlement and higher than expected revenue. Revenue from B2B hosted services was $67,300,000 down 17% year over year. B2B core recurring revenue was $74,000,000 down 18% year over year, driven by customer cancellations and down sales that we discussed in the Q1. Professional services revenue was $12,600,000 down 23% year over year, driven primarily by the same factors impacting revenues in hosted services. From a geographic perspective, U. Speaker 300:14:51S. Revenue was $57,300,000 and international revenue was $22,600,000 or 72% and 28% of total revenue, respectively. Average revenue per customer was $630,000 up 10%, driven in part by expansions with our largest customers and also by customer churn. RPO declined 13% sequentially to $283,000,000 driven again by the same factors underlying the decline in revenue. Net revenue retention was 83% in the 2nd quarter compared to 89% in the 1st quarter. Speaker 300:15:24As previously discussed, NRR is a lagging indicator of progress on our strategy due to it being a function of in period revenue. Given the size and timing of cancellations in the first half, we continue to expect revenue to decline sequentially through this year to Q4 as the full year impact of this customer churn is realized. In contrast to NRR, we view new annual recurring revenue that is the net of annualized bookings and annualized churn as a leading indicator of progress on our strategy. While still a negative value in the 2nd quarter, new ARR improved from the Q1 to the 2nd quarter and we continue to expect further improvement in the Q3. Finally, in terms of cash, we ended the 2nd quarter with $146,000,000 of cash on the balance sheet, inclusive of the proceeds net of transaction costs from the previously announced transaction with Lunera Waste. Speaker 300:16:17In terms of guidance for the Q3, we expect revenue to be in the range of $69,000,000 to 73,000,000 This is a sequential decline of approximately $9,000,000 at the midpoint, which as discussed is primarily driven by customer cancellations and down sells in the first half and to a lesser extent the divestiture of Wild Health. B2B core recurring revenue is expected to be approximately 92% of total revenue in the 3rd quarter. As for adjusted EBITDA in the 3rd quarter, we expect a range of $0,000,000 to $5,000,000 The sequential step down in adjusted EBITDA is driven almost entirely by the sequential step down in revenue. For the full year, we are maintaining our revenue guidance range of $300,000,000 to $315,000,000 As for B2B core recurring revenue, consistent with the Q3, we expect it to be approximately 92% of total revenue for the full year. Finally, we are also maintaining our adjusted EBITDA guidance at a range of $15,000,000 to $26,000,000 and we continue to expect the B2B business to be free cash flow positive for the full year. Speaker 300:17:22Before taking questions, I'd like to briefly summarize the progress we've made on our strategy during the prior two quarters. We've significantly reduced our cost structure and completed the wind down or divestiture of all non core business lines, focusing the business and bringing it one step closer to sustainable generation of cash flow. We've onboarded a CCO and a CRO who are accelerating the rebuild of our commercial operations. We've closed a transaction with our largest note holder that reduced our debt, extended maturities and raised capital to facilitate further deleveraging, giving customers the confidence to continue renewing and expanding business with us. Collectively, this progress coupled with ongoing investment into voice integrations and related partners strengthened LivePerson's foundation. Speaker 300:18:06We expect continued execution of our strategy to reinforce confidence in LivePerson as a trusted strategic partner for the voice to digital transformation of enterprise customer service. And with that, I'll pass the call back to the operator for questions. Operator00:18:27Thank you. We will now be conducting a question and answer The first question we have is John Van Rhee of Craig Hallum. Please go ahead. Speaker 400:19:07Hi, guys. Couple for me. So just maybe if you'd start and either of the Johns, I guess, take your pick. But on the net new ARR, just expand a bit more on bookings and churn relative to expectations in the quarter. I heard mentioned in passing, but I'm trying to deconstruct there. Speaker 400:19:26The churn meet expectations, was churn a bit higher than expectations? I think I heard you say the bookings were ahead, but just retouch on that for a second if you would. Speaker 300:19:35Yes, Jeff, I'll start here. Broadly speaking, we were a little better on churn than we previously expected. And on the new deals, while we were up 58% sequentially, that was a little lower than what we had previously expected. All in all though, new ARR improving considerably from the Q1 to the second. Speaker 400:19:56And on the new deal front, is talk about I mean, obviously, there's some changes going on in new CRO. You're obviously pushing harder into partners. But with respect to the direct sales motion and win rates you're seeing, just talk a bit about the observation over the last 6 months and how that's trending? Yes. Speaker 200:20:16I'll start, John, and if you want to add more detail, please feel free. So when it comes to new business, part of the reason we brought in Sandy Hogan is really to improve that partner motion and to rebuild our ability to acquire new logos. And it's also a structural improvement with pricing and packaging so that we can be more competitive. So the win rate has actually improved quarter over quarter. We still have some ways to go and it's going to take a few quarters for Sandy to fully ramp it up. Speaker 200:20:48But the initial indications is that quicker rollout of pricing and packaging, engaging with our customers with a stronger CS motion and some of the new capabilities that we're releasing on the A front are attractive to new logos and we're looking to see further improvement there and the win rate has been improving quarter over quarter. Speaker 400:21:12That's helpful. And on the churn, you said it was a bit better than expected. I know you're rolling out new pricing in packaging, but seems I think that just hit. So just curious what you would attribute the improved churn to? Speaker 200:21:26The improvement? John, I'll jump on that one too. Again, feel free to add some extra commentary here. So this goes back to the initial conversation that we're having, Jeff, with having to improve on exactly how we engage with customers getting additional value out of the platform. We spoke about being able to use more of what LivePerson offers versus just isolated use cases or messaging in and unto itself. Speaker 200:21:53So all of these motions now have had a few months to move forward with our CS organization. We spoke about the frameworks and conversational value paths that we use with customers to do that. So the improvements that we're seeing in retention really is being driven by some of the additional value that we're seeing being driven by our AI capabilities, opening up more of our portfolio to customers and the activities that Kevin Meeks is driving with our CS organization. And of course, the transaction with LinRock Lake is also playing into this as well. I think it removed some of the concern customers may have had in strategically partnering with us longer term. Operator00:22:42Thank you. With that, we have reached the end of theRead morePowered by