Revenue of $132.6 million, up 11% Year over Year
Adjusted EBITDA at the high end of guidance
Signed 45 new logo deals, including one of the largest new logo deals in LivePerson’s history
Maintains expectation of positive cash flow in the fourth quarter
LivePerson, Inc. (NASDAQ: LPSN) (“LivePerson” or the “Company”), a global leader in conversational AI, today announced financial results for the second quarter ended June 30, 2022.
Second Quarter Highlights
Total revenue was $132.6 million for the second quarter of 2022, an increase of 11% as compared to the same period last year. Within total revenue, business operations revenue for the second quarter of 2022 increased 12% year over year to $123.4 million, and revenue from consumer operations decreased 7% year over year to $9.1 million.
LivePerson signed 5 seven-figure deals and 104 deals in total for the second quarter, comprising of 45 new and 59 existing customer contracts. Trailing-twelve-months average revenue per enterprise and mid-market customer increased 23% for the second quarter to another record high of $660,000, up from approximately $535,000 for the comparable prior-year period.
“For the second quarter, LivePerson delivered on its commitments to re-accelerate new logo growth while cutting costs. We signed 104 total deals in the second quarter, including 45 new logos, which was up 55% Year over Year and up 73% sequentially, and achieved adjusted EBITDA at the top end of our guidance range,” said founder and CEO Robert LoCascio. “We continue to make substantial changes to our P&L — focusing on the most differentiated, high value components of our business — intended to drive high gross margins, strong operating margins, and high quality revenue growth. We believe we are putting the right operating framework in place to drive innovation and grow the company in a strong and sustainable way.”
“Our second quarter results demonstrate strong execution against our profitable growth plan, ” added CFO John Collins. “In addition to expense reductions, we have begun eliminating low-quality sources of revenue in order to further optimize the overall health of the P&L. While we expect the magnitude of both the expense reductions and the elimination of low-quality revenue to impact near-term growth, we believe these strategic moves will set a long term foundation for a best-in-class gross margin, significant free cash flow generation, and a return to a Rule of 40 framework.”
Customer Expansion
During the second quarter, the Company signed 5 seven-figure deals out of 104 total deals for the quarter with new customers, including:
- Capitec, the largest retail bank in South Africa
- The largest bank in Canada
- One of the largest Automotive OEM finance companies in the United States
- A global leader in household appliances
The Company also expanded business with:
- One of the world’s largest telecommunications companies
- A major airline
- One of the largest consumer banks in the midwest
- The largest telecommunications company in the UK
Net Loss and Adjusted Operating (Loss) Income
Net loss for the second quarter of 2022 was $75.4 million or $0.98 per share, as compared to a net loss of $21.1 million or $0.31 per share for the second quarter of 2021. Adjusted operating loss, a non-GAAP financial metric, for the second quarter of 2022 was $12.6 million, as compared to an adjusted operating income of $6.4 million for the second quarter of 2021. Adjusted operating (loss) income excludes amortization of purchased intangibles and finance leases, stock-based compensation, other litigation and consulting costs, restructuring costs, contingent earn-out adjustments, acquisition costs, interest income (expense), and other expense (income).
Adjusted EBITDA (Loss)
Adjusted EBITDA, a non-GAAP financial measure, for the second quarter of 2022 was $(5.5) million as compared to $13.4 million for the second quarter of 2021. Adjusted EBITDA excludes amortization of purchased intangibles and finance leases, stock-based compensation, depreciation, other litigation and consulting costs, restructuring costs, contingent earn-out adjustments, provision for (benefit from) income taxes, acquisition costs, interest income (expense), and other expense (income).
A reconciliation of non-GAAP financial measures to GAAP measures has been provided in the financial tables included in this press release. An explanation of the non-GAAP financial measures and how they are calculated is included below under the heading “Non-GAAP Financial Measures.”
Cash and Cash Equivalents
The Company’s cash balance was $425.9 million at June 30, 2022, as compared to $521.8 million at December 31, 2021.
Financial Expectations
The following forward-looking measures and the underlying assumptions involve significant known and unknown risks and uncertainties, and actual results may vary materially from these forward-looking measures. The Company does not present a quantitative reconciliation of the forward-looking non-GAAP financial measures, adjusted EBITDA, adjusted EBITDA margin, and non-GAAP gross margin to the most directly comparable GAAP financial measures (or otherwise present such forward-looking GAAP measures) because it is impractical to forecast certain items without unreasonable efforts due to the uncertainty and inherent difficulty of predicting, within a reasonable range, the occurrence and financial impact of and the periods in which such items may be recognized. In particular, these non-GAAP financial measures exclude certain items, including amortization of purchased intangibles, stock-based compensation, depreciation, other litigation and consulting costs, restructuring costs, contingent earn-out adjustments, benefit from income taxes, interest income (expense), and other expense (income), which depend on future events that the Company is unable to predict. Depending on the size of these items, they could have a significant impact on the Company’s GAAP financial results.
In the short term, due to the P&L optimizations we are undertaking as we execute on our profitable growth plan, including reduction in costs and intentional elimination of low margin revenue, and our ramping sales force, we are revising down our 2022 revenue guidance from $544.8 million – $563.3 million to $507.1 million – $518.3 million, or 8% to 10% growth year-over-year. The revenue guidance range for the third quarter is $120.5 million to $123.6 million, or 1.8% to 4.5% growth year-over-year.
With the strong cost out results of the second quarter demonstrating early signs of building leverage in the business and the Company’s commitment to execution on its profitable growth strategy, the Company is maintaining its 2022 adjusted EBITDA guidance to a range of $1.0 million to $10.0 million, or a 0.0% – 2.0% adjusted EBITDA margin. By reaffirming full year guidance for adjusted EBITDA, the implication for operating expenses is approximately $507 million at the midpoint, a reduction of $57 million in-year. The Company is guiding for third quarter adjusted EBITDA in a range of $0 million – $4.3 million or a 0% – 3.5% adjusted EBITDA margin.
Third Quarter 2022
|
Guidance |
|
|
Revenue (in millions) |
$120.5 – $123.6 |
|
Revenue growth (year-over-year) |
1.8% – 4.5% |
|
Adjusted EBITDA (in millions) |
$0 – $4.3 |
|
Adjusted EBITDA margin (%) |
0% – 3.5% |
Full Year 2022
|
Updated Guidance |
Previous Guidance |
|
|
Revenue (in millions) |
$507.1 – $518.3 |
$544.8 – $563.3 |
|
Revenue growth (year-over-year) |
8.0% – 10.4% |
16.0% – 20.0% |
|
Adjusted EBITDA (in millions) |
$1.0 – $10.0 |
$1.0 – $10.0 |
|
Adjusted EBITDA margin (%) |
0.0% – 2.0% |
0.0% – 2.0% |
The Company is raising guidance of non-GAAP gross margin from 70% – 72% to 72% – 74% for the full year 2022 and the third quarter of 2022.
Stock-Based Compensation
Included in the accompanying financial results are expenses related to stock-based compensation, as follows:
|
Three Months Ended |
Six Months Ended |
||||||
|
June 30, |
June 30, |
||||||
|
2022 |
2021 |
2022 |
2021 |
||||
|
(In thousands) |
|||||||
|
Cost of revenue |
$ 4,120 |
$ 1,386 |
$ 6,251 |
$ 3,281 |
|||
|
Sales and marketing |
5,942 |
3,373 |
12,591 |
7,155 |
|||
|
General and administrative |
13,231 |
3,110 |
23,669 |
5,760 |
|||
|
Product development |
13,224 |
7,218 |
25,872 |
13,502 |
|||
|
Total |
$ 36,517 |
$ 15,087 |
$ 68,383 |
$ 29,698 |
|||
Amortization of Purchased Intangibles and Finance Leases
Included in the accompanying financial results are expenses related to the amortization of purchased intangibles and finance leases, as follows:
|
Three Months Ended |
Six Months Ended |
||||||
|
June 30, |
June 30, |
||||||
|
2022 |
2021 |
2022 |
2021 |
||||
|
(In thousands) |
|||||||
|
Cost of revenue |
$ 4,561 |
$ 1,184 |
$ 8,977 |
$ 2,359 |
|||
|
Amortization of purchased intangibles |
923 |
374 |
1,822 |
749 |
|||
|
Total |
$ 5,484 |
$ 1,558 |
$ 10,799 |
$ 3,108 |
|||
Supplemental Second Quarter 2022 Presentation
LivePerson will post a presentation providing supplemental information for the second quarter 2022 on the investor relations section of the Company’s web site at www.ir.liveperson.com.
Earnings Teleconference Information
The Company will discuss its second quarter 2022 financial results during a teleconference today, August 8, 2022. To participate via telephone, callers should dial in five to ten minutes prior to the 5:00 p.m. Eastern start time; domestic callers (U.S. and Canada) should dial 1-877-407-0784, while international callers should dial 1-201-689-8560, and both should reference the conference ID “13731592.”
The conference call will also be simulcast live on the Internet and can be accessed by logging onto the investor relations section of the Company’s web site at www.ir.liveperson.com.
If you are unable to participate in the live call, the teleconference will be available for replay approximately two hours after the call. To access the replay, please call 1-844-512-2921 (U.S. and Canada) or 1-412-317-6671 (international). Please reference the conference ID “13731592.” A replay will also be available on the investor relations section of the Company’s web site at www.ir.liveperson.com.
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