LIVEPERSON INC Q2 FY2024 earnings call

• Capital structure: Completed deal with Lynrock Lake in early June, improving capital structure and boosting customer confidence for renewals and expansions.
• Go-to-market motion: New pricing and packaging launched GA on June 18, simplifying and streamlining, with strong product capabilities helping win back and expand a major healthcare provider. Partnership with Avaya on track with addressable opportunities in the pipeline.
• Partner strategy: Focus on unified omni-channel workspace integrating LivePerson with best-in-class voice solutions, with GA release of capabilities expected by end of Q3.
• Product integration and orchestration: Over 70 customers paying for generative AI, with 20% growth in adoption since last quarter. Powered over 6 million conversations with generative AI capabilities, up over 165% QoQ. Innovations at SPARC conference in May, including bringing your own LLM, Copilot Rewrite, generative AI routing agents, and data collection agents.

In the second quarter, total revenue was $79.9 million. B2B hosted services revenue was $67.3 million, down 17% year-over-year. B2B core recurring revenue was $74 million, down 18% year-over-year. Professional services revenue was $12.6 million, down 23% year-over-year. U.S. revenue was $57.3 million (72% of total revenue) and international revenue was $22.6 million (28% of total revenue). Average revenue per customer was $630,000, up 10%. RPO declined 13% sequentially to $283 million, and net revenue retention was 83% in the second quarter compared to 89% in the first quarter.

• Third quarter revenue expected to be in the range of $69 million to $73 million, a sequential decline primarily due to customer cancellations and downsells and divestiture of Wild Health.
• Third quarter adjusted EBITDA expected to be in the range of $0 to $5 million, driven by sequential revenue decline.
• Full-year revenue guidance maintained at $300 million to $315 million. B2B core recurring revenue expected to be approximately 92% of total revenue for the full year. Adjusted EBITDA guidance maintained at $15 million to $26 million, and B2B business expected to be free cash flow positive for the full year.

Factors such as customer cancellations and downsells, which are driving sequential revenue declines and impacting financial results. Also, the potential impact of various uncertainties on forward-looking statements as outlined in the earnings press release and SEC filings.

Q: Jeff Van Rhee asked about net new ARR, bookings, and churn relative to expectations.

A: John Collins responded that churn was a bit better than expected, and while new deals were up 58% sequentially, they were a bit lower than expected, but new ARR improved considerably from the first quarter to the second.

Q: Jeff Van Rhee inquired about new deal win rates.

A: John Sabino stated that the win rate has improved quarter-over-quarter, with Sandy Hogan's addition to the team helping, and quicker rollout of pricing and packaging and new AI capabilities making LivePerson more attractive to new logos, though further improvement is expected over the next few quarters.

Q: Jeff Van Rhee asked about the improved churn.

A: John Sabino mentioned that improved retention is driven by additional value from AI capabilities, frameworks and conversational value paths with customers, and the Lynrock Lake transaction removing customer concerns about long-term partnership.