LivePerson, Inc. Q4 FY2024 earnings call

John Sabino reflected on joining LivePerson 14 months ago, noting strengths and implementing a transformation strategy. Product initiatives in 2024 included AI features like Bring Your Own LLM and Agent Workspace for Voice. Generative AI usage saw a 17% sequential increase in customers and 37% in conversations. Go-to-market progress included transforming motion, new leadership, refined processes, and simplified pricing, with Q4 seeing 39 deals, 9 new logos, and 30 expansions/renewals.

Fourth quarter revenue was $73.2 million, above the high end of guidance, with adjusted EBITDA of $8.1 million also above the high end. Full year revenue was $312.5 million and adjusted EBITDA was $24.1 million, both above high ends of guidance. Hosted services revenue was $60.2 million (down 23% YoY), professional services revenue was $13 million (down 23% YoY). Recurring revenue was $68.6 million (94% of total revenue). U.S. revenue was $48.4 million (66% of total), international revenue was $24.8 million (34% of total). Net revenue retention was 82% in Q4, up from 79% in Q3.

Q1 2025 revenue expected $63M-$65M (sequential decline). Full year 2025 revenue expected $240M-$255M (93% recurring). Adjusted EBITDA for full year 2025 expected $14M loss to breakeven. Q1 2025 adjusted EBITDA expected $3M loss to $1M loss. Aim for 35% partner attach in 2025, seeing improvement from prior years.

Anticipated elevated attrition in first half of 2025 due to legacy renewal cycle. Impact on gross margin from cloud migration and new GCP costs in 2025.

Q: On partners, 35% partner attach in 2025, predecessor number?

A: John Sabino said 35% is target, predecessor number not met, but seeing improvement.

Q: Avaya partnership, Cisco/Amazon Connect timing?

A: Avaya partnership going well, closed 7-figure deal, pipeline in place. Cisco/Amazon Connect extension of voice strategy to cover 65% of voice calls.

Q: S&M incremental spend?

A: John Collins said no incremental investment relative to 2024, net reduction in cost structure, left more in S&M but overall cost reduced.

Q: Gross margin sustainability, attrition percentage, system overhaul meaning?

A: Gross margin influenced by consultant reduction and Gainshare labor, expected to come down in 2025. Attrition majority losses in Q1 2025, rest of year lighter. System overhaul means customers can keep contact center infrastructure in place while using LivePerson's digital.