Release Date: March 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LivePerson Inc (LPSN, Financial) exceeded financial expectations for Q4 2024, with revenue and adjusted EBITDA both above the high end of guidance ranges.
- The company has made significant progress in its transformation strategy, focusing on enhancing go-to-market capabilities, product innovation, and capital structure.
- LivePerson Inc (LPSN) introduced several new AI-driven features, such as Bring Your Own LLM and Copilot Rewrite, which have accelerated the adoption of Generative AI on their platform.
- The company has seen a 17% sequential increase in customers leveraging Generative AI and a 37% increase in conversations using their Gen AI suite.
- LivePerson Inc (LPSN) has a strong customer base, including Fortune 500 companies, and has achieved notable improvements in retention metrics and win rates.
Negative Points
- Revenue from hosted services and professional services both declined by 23% year-over-year.
- Net revenue retention was 82% in Q4, indicating challenges in maintaining customer revenue levels.
- The company expects revenue to decline through most of 2025 before reaching an inflection point for sequential growth by the end of the year.
- LivePerson Inc (LPSN) anticipates elevated levels of customer attrition in the first half of 2025 due to legacy renewal cycles.
- The company does not expect positive free cash flow in 2025, as they plan to continue investing in technical infrastructure and commercial capabilities.
Q & A Highlights
Q: Can you clarify the goal of 35% partner attached in 2025 and how it compares to 2024?
A: The 35% target refers to the total booking's value driven by partners. We are seeing steady improvement from this year, and while we haven't disclosed past numbers, we are aiming for this target in 2025. It's more than double what we're seeing now, indicating significant growth in our partner network.
Q: How is the Avaya partnership progressing, and what are the expectations for Cisco and Amazon Connect?
A: The Avaya partnership is progressing well, with over a 7-figure deal closed and more in the pipeline. We've partnered with Avaya to retain customers and defeat competitors. The Cisco and Amazon Connect partnerships are part of our strategy to integrate voice into the digital customer experience, aiming to cover 65% of voice calls.
Q: Can you quantify the incremental spend on Sales & Marketing (S&M) and the decision-making process behind it?
A: There isn't an incremental investment relative to 2024. We have reduced costs overall but left more in S&M compared to other areas to support our 2025 plan. This decision balances cost reduction with the need to drive top-line growth.
Q: Is the improved gross margin sustainable, and what factors influenced it?
A: The gross margin improvement was influenced by reduced consultant costs and labor from our Gainshare portfolio. However, there will be some pressure on gross margins in 2025 due to cloud migration costs, so it may decrease from Q4 levels.
Q: What percentage of customers have gone through the renewal cycle, and what is the expected attrition?
A: The legacy renewal cycle is expected to end in the first half of 2025, with most customer losses occurring in Q1. Attrition should decrease throughout the year, reaching normalized retention levels aligned with our goal of positive net ARR in the second half.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
