LIVEPERSON INC (LPSN)·Q2 2025 Earnings Summary

Executive Summary

• Revenue of $59.6M, at the high end of guidance; adjusted EBITDA of $2.9M, above the high end of guidance. Year-over-year revenue declined 25.4% on customer cancellations/downsells .
• Wall Street consensus (S&P Global) revenue for Q2 2025 was ~$58.6M; LivePerson delivered ~$1.0M above that. S&P “Primary EPS” consensus was -$2.96; company reported GAAP diluted EPS of -$0.17, reflecting definitional differences between S&P’s “Primary EPS” and company GAAP EPS *.
• FY25 guidance lowered for revenue to $230–$240M (from $240–$255M), while adjusted EBITDA was raised to -$3M to +$7M (from -$14M to $0). Q3 guide: revenue $56–$59M and adjusted EBITDA -$4M to -$2M .
• Strategic deleveraging agreement: exchange ~$341.1M of 2026 notes for $45M cash, $115M 2029 second-lien notes, and equity to reach 39% post-close, capturing $181M of debt discount and reducing debt by $226M—key near-term stock catalyst removing balance sheet overhang .

What Went Well and What Went Wrong

What Went Well

• Adjusted EBITDA beat guidance high end ($2.9M vs guide range of -$4M to -$2M), driven by ongoing cost discipline and operational efficiencies .
• AI adoption accelerated: 45% sequential increase in generative-AI-powered conversations; 17% of all conversations leverage at least one generative AI feature. “We are well-positioned to drive commercial execution,” said CEO John Sabino .
• Strategic partnerships deepened: expanded Google Cloud collaboration to embed Gemini/Vertex AI and joint GTM; Databricks relationship supporting unified conversational data and faster AI use-case iteration .

What Went Wrong

• Revenue -25.4% YoY; hosted and professional services fell 25% and 26% YoY, respectively, on cancellations/downsells .
• Net Revenue Retention fell to 78% (vs 80% in Q1 and 83% in Q2 2024), RPO declined to $197M, reflecting slower bookings and renewal hesitation among select large customers .
• Guidance lowered: FY25 revenue reduced to $230–$240M; management cited macro-driven elongated buying cycles and balance sheet uncertainty affecting commercial momentum prior to the refinancing announcement .

Financial Results

Core P&L vs prior year and prior quarter

Actual vs S&P Global Wall Street consensus (Q2 2025)

Note: Company-reported GAAP diluted EPS was $(0.17) and adjusted EBITDA was $2.9M; S&P’s “Primary EPS” and EBITDA definitions differ from company GAAP/Non-GAAP reporting .
Values retrieved from S&P Global.

Segment revenue breakdown (Q2)

KPIs and operating metrics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We took a decisive step to strengthen our financial foundation by securing a refinancing agreement that significantly deleverages our balance sheet and provides a clear runway to execute our strategy.” — CEO John Sabino .
• “This exchange captures $181 million of debt discount that accretes to shareholders, deleverages the balance sheet by $226 million, and extends LivePerson’s runway through 2029.” — CFO/COO John Collins .
• On AI traction: “Over 17% of all conversations on LivePerson’s platform leverage at least one form of generative AI feature.” — CEO John Sabino .
• On partnerships: “We’re deepening our relationship with Google Cloud… joint global go-to-market initiatives and collaborative product innovation.” — CEO John Sabino .

Q&A Highlights

• Win rates/new logos: Competitive win rates steady; decision delays and rescoping (not competitive losses) pushing some deals from Q2 into Q3 .
• Renewal pressure: Emphasis on large customers’ renewals impacted by perceived financial instability; refinancing expected to keep LivePerson “in the conversation” and improve renewal outcomes .
• Buying cycles: Macro uncertainty and proliferation of AI offerings lengthening cycles; AI committees/compliance add new decision gates .
• Cloud migration timing: Some regions see benefits by October; broader completion expected early next year; Vertex/Gemini integrations already in testing .

Estimates Context

• Q2 2025 revenue beat consensus by ~$1.0M ($59.6M actual vs $58.6M consensus) — a modest positive surprise likely driven by retention slightly better than expected and cost discipline enabling EBITDA outperformance *.
• EPS comparison requires care: S&P “Primary EPS” consensus (-$2.96) and “actual” (-$1.43) differ materially from the company’s GAAP diluted EPS (-$0.17), reflecting definition/methodology differences (e.g., normalization, share counts). Analysts may need to adjust models to align on EPS definitions used for comp and guidance tracking *.
• FY25 consensus revenue ~$237.0M sits near company’s new midpoint ($235M), while consensus EBITDA ~$10.2M is above company’s raised adjusted EBITDA range (-$3M to $7M), implying potential negative revisions to EBITDA unless commercial momentum accelerates in H2 *.

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Near-term: Revenue trajectory remains down YoY with NRR at 78% and RPO declining; expect continued pressure into Q3 per guide ($56–$59M) before potential stabilization as refinancing lifts renewal headwinds .
• Balance sheet catalyst: Deleveraging/extension to 2029 reduces refinancing risk and should improve enterprise buyers’ confidence—key to unlocking renewals and expansions with large accounts .
• AI adoption momentum: 45% sequential increase in gen-AI conversations and 17% of interactions leveraging gen-AI indicate expanding product-market fit; expanded Google Cloud partnership is a strategic tailwind .
• Cost discipline: Adjusted EBITDA beat despite revenue pressure suggests disciplined opex and operational efficiencies; FY25 adjusted EBITDA guidance raised to a positive midpoint .
• Watch KPIs: Track NRR and bookings for inflection; improvements would precede revenue stabilization and support FY EBITDA outlook .
• Estimates: Expect model alignment on EPS definitions and potential consensus EBITDA revisions to reflect company’s non-GAAP framework and guide *.
• Trading setup: Near-term stock moves likely tied to deleveraging news flow and signals of renewal recovery; medium-term thesis hinges on pipeline conversion, large-customer renewals post-refi, and monetization of AI partnerships (Google Cloud, AWS integration) .

Bold indicates notable beats/misses/surprises in the tables above where applicable.