Executive Summary

Q3 revenue of $60.154M was above the high end of guidance and beat S&P Global consensus by ~$3.0M (+5.3%); S&P “Primary EPS” was a large beat versus consensus, driven by a $27.7M gain on troubled debt restructuring and cost actions, while GAAP diluted EPS was -$2.76 due to share effects and non-GAAP adjustments . Revenue consensus $57.112M*; EPS consensus -$2.30*; S&P Primary EPS actual 2.6611*.
Full-year guidance raised: revenue to $235–$240M (+$2.5M at midpoint) and adjusted EBITDA to $7.5–$12.5M (+$8M at midpoint). Q4 revenue guide set at $50.5–$55.5M with adjusted EBITDA of -$0.3–$4.7M .
Balance sheet and cost structure transformed: strategic refinancing closed in September (deleverage $226M; $181M debt discount accretive to equity) and Q3 restructuring costs realized, with full OpEx benefits expected in Q4 and 2026 .
Commercial traction stabilizing: 28 deals signed (26 expansions/renewals, 2 new logos); ARPC up 6% YoY to $665K; net revenue retention improved sequentially to 80.4%; generative AI now ~20% of conversations .
Product and GTM catalysts: launch of Conversation Simulator; live on Google Cloud Marketplace; expanding Google Gemini integrations (Copilot Translate), supporting improved renewals and new upsell opportunities .

What Went Well and What Went Wrong

What Went Well

Revenue and adjusted EBITDA both exceeded high-end guidance; management attributed revenue upside largely to timing and variable revenue recognition, and EBITDA strength to cost discipline and restructuring execution .
Financial foundation strengthened: September refinancing deleveraged by $226M, captured $181M debt discount accretive to equity, and extended maturities to 2029—addressing a key customer hesitation and enabling improved renewal outcomes .
Product momentum: Conversation Simulator launched to de-risk GenAI deployments; early customers (e.g., Telstra) using the product; partnership with Google expanding (RCS, Gemini 2.5 Copilot Translate), and listing on Google Cloud Marketplace opening a frictionless channel .

What Went Wrong

Top line still declining YoY: Q3 revenue fell 19.0% YoY due to cancellations and downsells; hosted services down 18% YoY; professional services down 23% YoY .
Free cash flow remained negative (-$8.9M in Q3) and cash declined to $106.7M; recurring revenue mix remained 92%, reflecting ongoing revenue pressure and cautious services activity .
Q4 outlook implies sequential decline vs Q3 as timing benefits reverse; management guided Q4 adjusted EBITDA to $0–$5M and flagged that full cost restructuring benefits begin in Q4 and 2026, highlighting near-term execution risk .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$64.700	$59.600	$60.154
Net Income ($USD Millions)	$(14.133)	$(15.710)	$8.711
Diluted EPS ($USD)	$(0.24)	$(0.17)	$(2.76)
Adjusted EBITDA ($USD Millions)	$0.167	$2.919	$4.751
Adjusted Operating Income ($USD Millions)	$(5.420)	$(2.659)	$(0.717)
Free Cash Flow ($USD Millions)	$(6.855)	$(14.812)	$(8.898)

Segment Revenue	Q1 2025	Q2 2025	Q3 2025
Hosted Services ($USD Millions)	$55.134	$50.321	$51.175
Professional Services ($USD Millions)	$9.566	$9.279	$8.979
Total Revenue ($USD Millions)	$64.700	$59.600	$60.154

KPIs	Q1 2025	Q2 2025	Q3 2025
TTM ARPC ($USD)	$640,000	$655,000	$665,000
Recurring Revenue (% of total)	93%	92%	92%
Total Deals (count)	50	38	28
Net Revenue Retention (%)	80%	78%	80.4%
Remaining Performance Obligations ($USD Millions)	$221	$197	$182
U.S. Revenue ($USD Millions)	—	$36.7	$37.0
International Revenue ($USD Millions)	—	$22.9	$23.2
Cash & Cash Equivalents ($USD Millions)	$176.254	$161.963	$106.661

Q3 2025 vs S&P Global Consensus	Consensus	Actual	Surprise
Revenue ($USD Millions)	$57.112*	$60.154	+$3.042 (+5.3%)*
Primary EPS ($USD)	$(2.30)*	$2.6611*	+$4.9611*

Values with asterisks were retrieved from S&P Global. Consensus and surprise values reflect S&P Global methodologies and may differ from GAAP/non-GAAP reporting. The GAAP diluted EPS in Q3 was -$2.76 due to share count and non-recurring items; S&P “Primary EPS” reflects normalized definitions .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	FY 2025	$230–$240	$235–$240	Raised
Adjusted EBITDA ($USD Millions)	FY 2025	$(3)–$7	$7.5–$12.5	Raised
Revenue ($USD Millions)	Q4 2025	—	$50.5–$55.5	New
Adjusted EBITDA ($USD Millions)	Q4 2025	—	$(0.3)–$4.7	New
Recurring Revenue (% of total)	Q4 2025	—	~93%	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3 2025)	Trend
Debt refinancing / capital structure	Q2: announced exchange to deleverage, extend maturities; customer hesitation impacting renewals	Refinancing closed; deleveraged $226M; improved renewal tone; runway to 2029	Positive inflection; removes key headwind
Generative AI adoption	Q1: 25% sequential increase; 14% more customers using GenAI ; Q2: 45% sequential increase; ~17% of conversations	~20% of conversations now using GenAI; Gartner recognition; new Copilot Translate	Accelerating adoption; external validation
Product innovation (Conversation Simulator)	Not yet launched in Q1/Q2	Launched; dual human+bot testing; early customers (Telstra, Open University); vendor-agnostic	New revenue stream; strong early interest
Partnerships (Google/AWS)	Q1: Amazon Connect integration planned; partner attach momentum ; Q2: Google Cloud deepening, Databricks expansion	Live on Google Cloud Marketplace; RCS partnership; Gemini 2.5 integration	GTM leverage increasing
Commercial momentum / bookings	Q1: deals slipped to Q2, pipeline improving ; Q2: bookings sequentially up 15% but YoY down; NRR 78%	Slight sequential bookings increase; NRR 80.4%; 28 deals; improved renewal confidence	Stabilizing; early signs of rebuild
Macro/approval processes	Q1/Q2: elongated cycles, AI risk/compliance gates	Timing/variable revenue recognized in Q3; approval processes persist	Persistent headwind; managed timing

Management Commentary

CEO on stabilization and innovation: “With our financial foundation stabilized and commercial traction building, we are in a strong position to continue to execute our strategy.”
CFO on beat drivers: “Upside... characterized as timing... some deals that would have otherwise taken place in the fourth quarter then now in the third. There's variable revenue... driving the balance of the upside.”
CEO on Conversation Simulator differentiation: “No one... addresses both sides... human and bot... an open product... we can test any LLM... continuous improvement and training loop, compliance and governance...”
CFO on cost actions: “We should begin to experience the full effects of the cost restructuring during Q4 and for full year 2026.”
Refinancing impact: “Materially deleverages the company by $226 million... captures a significant $181 million debt discount... extends... to December 2029.”

Q&A Highlights

Upside attribution: Management emphasized timing (Q3 pull-forward from Q4) and variable revenue recognition as primary drivers of the beat .
OpEx trajectory: The restructuring executed in Q3 drives the Q4 EBITDA guide beat; full effects flow through Q4 and into 2026 .
Competitive landscape for Conversation Simulator: Differentiation in dual human+bot training, open architecture across LLMs and CCaaS, in-workflow training; positions LivePerson uniquely versus point solutions .
Renewal dynamics: Refinancing alleviated customer financial stability concerns, converting cancellation/short-term extensions into full renewals in some cases .

Estimates Context

Q3 revenue beat: $60.154M actual vs $57.112M consensus*; absolute surprise +$3.042M (+5.3%)* .
EPS beat: S&P Primary EPS actual 2.6611* vs -2.30* consensus; GAAP diluted EPS was -$2.76 due to share/effects, while net income swung positive on a $27.7M gain from troubled debt restructuring .
Implications: Street models likely raise FY adjusted EBITDA and revenue on improved renewal tone, cost restructuring benefits, and Q4 guide; however, normalize for non-recurring gains when assessing EPS quality . Values with asterisks were retrieved from S&P Global.

Key Takeaways for Investors

The quarter’s beat was largely driven by timing/variable revenue and cost actions; near-term revenue volatility may persist as recognition timing reverses in Q4 .
Structural de-risking (deleverage ~$226M, maturities to 2029) removes a key commercial headwind and supports renewal/upsell motion into 2026 .
Product-led catalysts (Conversation Simulator, Google Cloud Marketplace, Gemini integrations) expand TAM and create new revenue streams, supporting ARPC growth .
Watch cash/FCF trajectory: Q3 FCF remained negative (-$8.9M) and cash declined to $106.7M; management aims for sustainable FCF post-restructuring in 2026 .
KPIs stabilizing: NRR improved to 80.4% and ARPC rose to $665K; track RPO ($182M) and recurring mix (92%) for signs of inflection .
Guidance raised across FY revenue and adjusted EBITDA; Q4 guide embeds reversal of Q3 timing and continuing cost benefits—focus on execution to deliver the EBITDA range .
EPS quality: GAAP net income benefited from a $27.7M restructuring gain; use normalized measures and adjusted EBITDA to assess operating performance .

LIVEPERSON INC (LPSN)·Q3 2025 Earnings Summary