Liveperson ((LPSN)) has held its Q4 earnings call. Read on for the main highlights of the call.
LivePerson’s recent earnings call paints a picture of both optimism and caution. The company has demonstrated strong performance by exceeding financial expectations in the fourth quarter and showcasing significant innovation and customer engagement. However, challenges such as anticipated revenue decline and customer attrition cast a shadow over these achievements. The strategic focus on AI and partnerships offers a glimmer of hope, yet financial pressures and a challenging transition period contribute to an uncertain outlook.
Exceeding Financial Expectations
In the fourth quarter, LivePerson reported revenue of $73.2 million and an adjusted EBITDA of $8.1 million, both surpassing the high end of the company’s guidance ranges. For the full year, revenue reached $312.5 million, with an adjusted EBITDA of $24.1 million, exceeding expectations and highlighting the company’s financial resilience.
Strong Product Innovation and Adoption
LivePerson introduced several new AI-driven features, including Bring Your Own LLM and Copilot Rewrite, which have accelerated the adoption of generative AI on their platform. The launch of Agent Workspace for Voice, integrating voice and digital channels, marks a significant step in product innovation and adoption.
Significant Customer Wins and Expansions
The company signed 39 deals in the fourth quarter, including 9 new logos and 30 expansions and renewals. The total deal value increased by 18% quarter-over-quarter, with new logo deal values more than doubling the average over the first three quarters of 2024.
Positive Trends in AI and Partner Strategy
There was a 17% sequential increase in customers leveraging generative AI and a 37% increase in conversations using the gen AI suite in Q4. The partner strategy aims for a 35% attach rate in 2025, more than doubling current contributions, indicating a positive trend in AI and partnerships.
Revenue Decline and Customer Attrition
Despite exceeding revenue expectations, LivePerson anticipates a decline throughout most of 2025 due to customer cancellations. The net revenue retention was 82% in Q4, with expected sequential declines through the year, highlighting challenges in maintaining customer relationships.
Challenging Transition Period
The company is navigating a legacy renewal cycle, which impacts attrition levels. Attrition is expected to remain elevated for the first half of 2025, posing a challenge during this transition period.
Financial Pressure and Cost Structure Adjustments
LivePerson expects an adjusted EBITDA for 2025 ranging from a $14 million loss to breakeven, with no positive free cash flow anticipated for the year. Ongoing cost structure adjustments are necessary to address financial pressures.
Forward-Looking Guidance
Looking ahead to 2025, LivePerson anticipates a revenue range of $240 million to $255 million, with approximately 93% expected to be recurring. The first-quarter 2025 revenue is projected to be between $63 million and $65 million, with an adjusted EBITDA loss ranging from $3 million to $1 million. The company emphasizes continued demand for AI-driven solutions and expects to achieve positive net new annual recurring revenue (ARR) in the second half of 2025, despite ongoing attrition challenges in the first half of the year.
In summary, LivePerson’s earnings call reflects a mixed sentiment, with strong financial performance and innovation tempered by challenges such as revenue decline and customer attrition. The company’s strategic initiatives in AI and partnerships offer potential for growth, but financial pressures and a challenging transition period contribute to an uncertain outlook. Investors and stakeholders will be keenly watching how LivePerson navigates these challenges in the coming year.