Revenue: $64.7 million in Q1, above the midpoint of guidance range. Adjusted EBITDA: $0.2 million, above the high-end of guidance range. Recurring Revenue: $60.4 million, representing 93% of total revenue, down 22% year over year. Professional Services Revenue: $9.6 million, down 30% year over year. Net Revenue Retention: 80% in Q1, down from 82% in Q4. Cash Balance: $176 million at the end of Q1. Full-Year Revenue Guidance: Reaffirmed at $240 million to $255 million. Q2 Revenue Guidance: Expected to range from $57 million to $60 million. Q2 Adjusted EBITDA Guidance: Expected loss of $4 million to $2 million.

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Release Date: May 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

LivePerson Inc (NASDAQ:LPSN) reported first-quarter revenue of $64.7 million, which was above the midpoint of their guidance range. The company achieved an adjusted EBITDA of $0.2 million, surpassing the high-end of their guidance range. LivePerson Inc (NASDAQ:LPSN) saw a 14% increase in the number of customers using their generative AI tools and a 25% sequential increase in conversations powered by generative AI. The company signed 50 deals in the first quarter, including 5 new logos and 45 expansions and renewals, marking a 25% increase quarter-over-quarter. LivePerson Inc (NASDAQ:LPSN) is launching an integration with Amazon Connect, which is expected to enhance their go-to-market strategy and customer engagement capabilities.

Negative Points

Revenue from hosted services decreased by 23% year-over-year, and professional services revenue fell by 30% year-over-year. Net revenue retention was 80% in the first quarter, down from 82% in the previous quarter. The company experienced extended enterprise buying cycles, causing several large deals to shift from Q1 to Q2. LivePerson Inc (NASDAQ:LPSN) expects sequential declines in revenue through most of the year before reaching an inflection point by the end of the year. The company does not expect positive free cash flow in 2025, despite efforts to improve the cost structure.

Q & A Highlights

Q: Can you discuss the progress on deals that slipped from Q1 to Q2 and any potential impact from the macro environment on future deals? A: John Collins, CFO and COO, explained that while the macro environment may be affecting sales cycles, the specific impact on Q1 is unclear. The deals that slipped are expected to close in Q2, and they have actually expanded in size. John Sabino, CEO, added that while the macro situation is uncertain, they are not seeing deals shrink or customers back away. Instead, there is increased interest in enhanced AI capabilities.

Story Continues

Q: What is the level of enthusiasm for the upcoming Amazon Connect integration, and how will it impact your go-to-market strategy? A: John Sabino, CEO, expressed optimism about the Amazon Connect integration, noting early interest and alignment with LivePerson's strategy of allowing customers to engage with their tech stack without significant disruption. This integration is expected to positively impact both the partner network and customer base, similar to the strategy with Avaya.

Q: Can you elaborate on the expected improvement in renewal rates for Q2 and how it compares to previous trends? A: John Collins, CFO and COO, stated that Q2 reflects a significant improvement in renewal rates, approaching industry norms, which is a positive change from the past few quarters. John Sabino, CEO, added that this improvement is due to changes in customer success efforts and focus on adoption and value use cases.

Q: Are there noticeable differences in pipeline and bookings activity between the US and international markets? A: John Collins, CFO and COO, noted that there are no significant regional differences currently, as changes in commercial motion are taking effect. John Sabino, CEO, emphasized that improvements are across the board, driven by strategic deployment of sales teams and pricing alignment.

Q: Can you quantify the improvement in the pipeline? A: John Sabino, CEO, mentioned that while they do not typically report on pipeline specifics, it has improved over last year. John Collins, CFO and COO, added that they are building more pipeline each quarter in 2025 compared to 2024, indicating a healthy and improving pipeline.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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