LivePerson, Inc. Q2 FY2025 earnings call

Refinancing Agreement

• Announced a refinancing agreement with 2026 noteholders, which meaningfully delevers the balance sheet, extends debt maturities to 2029, and shifts enterprise value to equity holders.

Operational Performance

• Delivered revenue of $59.6 million above the midpoint of guidance range; adjusted EBITDA was $2.9 million exceeding the high end of guidance range.

Product Strategy

• 45% sequential increase in conversations powered by Generative AI Suite; over 17% of all conversations on platform leverage Generative AI features, up 5 percentage points from prior quarter.
• Strategic partnerships: Deepened relationship with Google Cloud for joint go-to-market and product innovation; expanding relationship with Databricks to unlock advantages in analytics, Agentic AI use cases, and enabling others to build solutions on platform.

Commercial Results

• Second quarter bookings improved sequentially over Q1 but overall new business in first half was slower than anticipated; renewal hesitation from a few larger customers due to macroeconomic uncertainty and uncertainty around capital structure.

Total revenue was $59.6 million, which was above the midpoint of the guidance range. Adjusted EBITDA was $2.9 million, exceeding the high end of the guidance range. Revenue from hosted services was $50.3 million, down 25% year-over-year. Recurring revenue was $55 million, accounting for 92% of total revenue. Professional services revenue was $9.3 million, down 26% year-over-year. U.S. revenue was $36.7 million (62% of total revenue) and international revenue was $22.9 million (38% of total revenue). Average revenue per customer was $655,000, up 4% year-over-year. RPO declined to $197 million. Net revenue retention was 78% in the second quarter.

• Revised full year revenue guidance to $235 million at midpoint, a decrease of approximately 5%.
• Increased full year adjusted EBITDA guidance midpoint to positive $2 million, an increase of $9 million.
• Third quarter revenue expected to range from $56 million to $59 million.
• Full year adjusted EBITDA guidance range revised to a loss of $3 million to a profit of $7 million.
• Third quarter adjusted EBITDA expected to range from a loss of $4 million to a loss of $2 million.

• Broader macroeconomic uncertainty extending enterprise buying cycles, especially for high-value AI solutions.
• Uncertainty around capital structure being a headwind in commercial process.
• Newer competitors offering AI bot capabilities creating increased headwinds.

Q: About new logo capture, win rates and impact of new AI-based competitors on cycles A: John Sabino said win rates stay relatively consistent, some opportunities pushed out to Q3 and beyond due to delayed decision-making or rescoping, and newer competitors offering AI bot capabilities create increased headwinds Q: On renewal side, pressures from large customers and alleviating concerns A: John Sabino said some largest customers had enterprise buying decisions further out, and the refinancing deal helps improve conversations with these customers; John Collins added balance sheet and macro uncertainties are interrelated and the deal keeps LivePerson in the conversation with large customers for renewals and expansions Q: On technology side, timeline for migration to Google Cloud and Databricks and benefit to buying and adoption cycles A: John Sabino said for some customers in some regions, migration could be around October, and mostly complete early next year; already working with Google to create capabilities with Vertex and Gemini and seeing benefits even before year end