Executive Summary

Q1 2025 revenue of $64.7M modestly exceeded internal guidance midpoint and was slightly above consensus; adjusted EBITDA of $0.2M came in above the high end of guidance, reflecting continued cost discipline despite sequential revenue step-down .
Year-over-year revenue declined 24% due to customer cancellations and downsells; management reaffirmed FY25 guidance (revenue $240–$255M; adj. EBITDA -$14M to breakeven) and introduced Q2 guidance (revenue $57–$60M; adj. EBITDA -$4M to -$2M) .
Operationally, AI adoption accelerated (customers using gen AI +14% q/q; gen-AI-powered conversations +25% q/q), with growing partner momentum and an upcoming Amazon Connect integration expected to expand reach without “rip-and-replace” risk for enterprises .
Bookings timing elongated by added AI risk/compliance approvals and macro uncertainty, pushing several large deals from Q1 to Q2, but management indicated those deals grew in size and remain on track to close in Q2, supporting expectations for positive net new ARR in 2H25 .
Near-term stock catalysts: execution on Q2 closes and partner-led deals (Amazon Connect launch, Avaya pipeline) and evidence of renewal-rate normalization toward industry norms beginning in Q2 .

What Went Well and What Went Wrong

What Went Well

Adjusted EBITDA positive ($0.2M) and above the high end of guidance despite sequential revenue pressure, driven by cost optimization and reductions in consulting and Gainshare labor .
AI adoption and product differentiation strengthened: “innovation without disruption” resonated; customers increased gen-AI usage and LivePerson showcased enterprise-grade guardrails and orchestration, with Amazon Connect integration planned in Q2 .
Partner momentum and pricing/packaging progress: goal of 35% partner attach for 2025; IBM renewed/expanded under the Gold package leveraging watsonx; simplified Bronze/Silver/Gold pricing saw continued traction .

What Went Wrong

Revenue down 24% YoY on cancellations/downsells; sequential decline expected through most of FY25 before inflecting by year-end as legacy renewal cycle rolls off .
Elongated sales cycles due to AI risk/compliance and macro uncertainties pushed large deals from Q1 into Q2, temporarily impacting bookings timing .
KPIs reflect pressure: net revenue retention 80% (vs. 82% in Q4), RPO declined to $221M, and free cash flow was negative ($6.9M) as operating cash flow dipped (-$3.1M) and capex remained elevated .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$74.244	$73.206	$64.700
Net Loss ($USD Millions)	$(28.309)	$(112.128)	$(14.133)
Diluted EPS ($USD)	$(0.32)	$(1.27)	$(0.24)
Adjusted EBITDA ($USD Millions)	$7.257	$8.117	$0.167
Gross Profit ($USD Millions)	$49.697 (Rev 74.244 ; CoR 24.547 )	$55.024 (Rev 73.206 ; CoR 18.182 )	$46.482 (Rev 64.700 ; CoR 18.218 )
Gross Margin (%)	66.9% (Rev/CoR cited above)	75.1% (Rev/CoR cited above)	71.9% (Rev/CoR cited above)

Notes: Gross profit and gross margin are computed from cited revenue and cost of revenue line-items.

Segment revenue breakdown (disaggregated):

Revenue Source	Q1 2024 ($000s)	Q1 2025 ($000s)
Hosted services	$71,495	$55,134
Professional services	$13,654	$9,566
Total revenue	$85,149	$64,700

KPIs and mix:

KPI	Q3 2024	Q4 2024	Q1 2025
Deals signed (#)	44	39	50
New logos (#)	9	9	5
ARPC (TTM, $000s)	630	625	640
Net Revenue Retention (%)	n/a	82%	80%
Recurring revenue (% of total)	93%	94%	93%
U.S. revenue ($M)	n/a	$48.4	$40.0
International revenue ($M)	n/a	$24.8	$24.7
RPO ($M)	n/a	$232	$221
Free Cash Flow ($M)	$(0.230)	$(6.753)	$(6.855)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q2 2025	n/a	$57–$60	New
Adjusted EBITDA ($M)	Q2 2025	n/a	$(4)–$(2)	New
Adjusted EBITDA margin (%)	Q2 2025	n/a	(7.0)%–(3.3)%	New
Recurring revenue (% of total)	Q2 2025	n/a	93%	New
Revenue ($M)	FY 2025	$240–$255	$240–$255	Maintained
Adjusted EBITDA ($M)	FY 2025	$(14)–$0	$(14)–$0	Maintained
Adjusted EBITDA margin (%)	FY 2025	(5.8)%–0.0%	(5.8)%–0.0%	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q3 2024)	Previous Mentions (Q-1: Q4 2024)	Current Period (Q1 2025)	Trend
AI adoption & orchestration	Emphasis on gen-AI features; bookings up; B2B core recurring 93%	Gen-AI usage +17% q/q; orchestration vision; Bring Your Own LLM; Copilot Rewrite	Customers using gen AI +14% q/q; gen-AI conversations +25% q/q; guardrails in regulated industries	Improving adoption
Partnerships (Avaya, Amazon Connect, Cisco)	Avaya omnichannel launch drove pipeline	Voice integrations w/ Avaya; plan to add Cisco, Amazon Connect in H1’25	Amazon Connect integration launching Q2; early interest; expands TAM without rip-and-replace	Strengthening
Pricing/packaging (Bronze/Silver/Gold)	New model traction, larger deals, shorter cycles	Deal volume more than doubled; ARR +5x under new pricing; 7-figure renewal	IBM recognized value in Gold; continued refinements to incent 3rd-party bot usage (~20% of bot usage today)	Building momentum
Renewal cycle & retention	Elevated churn; working through renewal cycle	Attrition elevated in H1’25; NRR expected to decline sequentially; positive net new ARR in 2H	NRR 80%; renewal rates forecast to approach industry norms in Q2+	Normalizing by midyear
Sales cycle length & macro	n/a	Macro constraints; balancing investments vs EBITDA	Elongation due to AI risk/compliance; macro uncertain; deals grew in size and are on track for Q2 close	Longer approval cycles, but constructive
Regional trends	APAC strong; EMEA rebuilding (noted later)	n/a	No significant regional differences; APAC continued strong; EMEA in rebuild; improvements broad-based	Broad-based improvement

Management Commentary

“Our innovation without disruption approach continues to resonate, enabling customers to seamlessly adopt AI and digital capabilities within a single platform without a costly rip-and-replace.” — CEO John Sabino .
“We saw a 14% increase in the number of customers using our generative AI tools and a 25% sequential increase in conversations powered by generative AI.” — CEO John Sabino .
“We’re excited about the planned launch of our integration with Amazon Connect in the second quarter… a net positive that aligns tightly with our current strategy.” — CEO John Sabino .
“We continue to observe growing enterprise demand for AI agents and orchestration… introducing new deal complexity associated with AI risk and compliance.” — CFO/COO John Collins .
“We remain confident in our expectation for positive net new ARR in the second half of this year.” — CFO/COO John Collins .

Q&A Highlights

Sales cycle elongation: Added AI risk/compliance approvals and macro uncertainty pushed several large Q1 deals into Q2; management has specific close plans and noted deal sizes expanded in Q2 .
Amazon Connect integration: Early enthusiasm among customers/partners; strategy complements Avaya to reach broader TAM and enable transformation without “rip-and-replace” .
Renewal rates: Expected to improve materially beginning in Q2, approaching industry norms; Q1 marked the final quarter materially impacted by legacy renewal cycle .
Pipeline: Healthy and improving vs. 2024; building more pipeline each quarter in 2025; improvements broad-based across regions .

Estimates Context

Actual vs Wall Street consensus (S&P Global) for Q1 2025:

Metric	Consensus	Actual	Result
Revenue ($USD)	$64.25M*	$64.70M	Slight beat
Primary EPS (S&P “Primary EPS”) ($USD)	-2.85*	GAAP Diluted EPS: -0.24	Apparent beat (note metric definitions differ)
EBITDA ($USD)	-$1.99M*	Adjusted EBITDA: $0.17M	Beat (definitions differ)

Values retrieved from S&P Global*. Note: S&P “Primary EPS” and “EBITDA Consensus Mean” may not align with company-reported GAAP diluted EPS and adjusted EBITDA definitions; comparisons are indicative and require metric normalization for precision.

Forward estimates snapshot:

Period	Revenue Consensus Mean ($USD)	Primary EPS Consensus Mean ($USD)	EBITDA Consensus Mean ($USD)
Q2 2025	$58.57M*	-2.96*	-$3.48M*
FY 2025	$237.0M*	-4.40*	$10.15M*

Values retrieved from S&P Global*. Company guidance for Q2 2025: revenue $57–$60M; adj. EBITDA -$4M to -$2M . FY 2025 guidance maintained: revenue $240–$255M; adj. EBITDA -$14M to $0 .

Key Takeaways for Investors

The quarter demonstrated disciplined execution: adjusted EBITDA topped guidance despite sequential revenue decline; gross margin remained in the low-70s% range, reflecting cost actions and lower consulting/Gainshare labor .
Revenue pressure persists near term as legacy renewal cycle rolls off; watch for renewal-rate normalization beginning in Q2 and positive net new ARR in 2H25 to set up FY26 growth trajectory .
Product/partner catalysts: Amazon Connect integration launch (Q2), continued Avaya traction, and maturing Bronze/Silver/Gold packaging should expand TAM, accelerate adoption, and support larger deal sizes without “rip-and-replace” friction .
AI narrative strengthening: measurable increases in gen-AI usage and enterprise-grade guardrails position LivePerson as a trusted orchestration layer for regulated industries—an angle likely to resonate in current compliance-heavy buying cycles .
Watch KPIs: NRR (80%), RPO ($221M), and recurring mix (93%) frame near-term stability; evidence of bookings conversion in Q2 (slipped deals closing) is a key trading catalyst .
Balance sheet/cash: $176.3M cash; negative FCF in Q1; management continues to balance investments for growth with cost reductions—track cash trajectory and any updates on capital structure over 2025 .
Estimate dynamics: Q2 revenue guide aligns broadly with consensus; upside could come from partner-led closes and improved renewals, while downside risk remains tied to macro and AI approval gating. Values retrieved from S&P Global*.

Citations: Q1 2025 8-K press release and exhibits ; Q1 2025 earnings call transcript ; Q4 2024 8-K and call ; Q3 2024 8-K ; additional relevant press releases .

LIVEPERSON INC (LPSN)·Q1 2025 Earnings Summary