LIVEPERSON INC (LPSN)·Q4 2024 Earnings Summary

Executive Summary

• Q4 revenue of $73.2M and adjusted EBITDA of $8.1M were both above the high end of company guidance; revenue still fell 23.3% YoY on cancellations and downsells .
• Commercial execution improved: third straight quarter of sequential bookings growth; Q4 total deal value rose 18% QoQ with new-logo deal values more than 2x the Q1–Q3 average .
• 2025 outlook implies ongoing top-line pressure near term: Q1 revenue guided to $63–$65M and adjusted EBITDA to $(3)M–$(1)M; full-year 2025 revenue $240–$255M and adjusted EBITDA $(14)M–$0, with management expecting sequential revenue growth by year-end as churn normalizes and bookings compound .
• Key catalysts: expanding voice/AI partnerships (7‑figure Avaya win; Cisco and Amazon Connect integrations in 1H25), rising gen‑AI adoption, and evidence of churn stabilization in 2H25; offsets include large Q4 impairment charges and anticipated 2025 gross margin pressure from cloud migration (GCP) .

What Went Well and What Went Wrong

What Went Well

• Beat on both revenue and adjusted EBITDA vs guidance; management cited favorable deal timing and cost reductions as drivers .
• Commercial momentum: 39 total Q4 deals (9 new logos), total deal value +18% QoQ; regulated industries represented ~80% of bookings; ARPC rose to $625k (TTM) .
• Product/partner traction: 7‑figure Avaya deal closed; plans to add Cisco and Amazon Connect; generative AI adoption rose sequentially (+17% customers; +37% conversations) .
  • “We are seeing increasing demand for AI agents and AI orchestration… and growing interest from partners… three consecutive quarters of sequential bookings growth” — CFO/COO John Collins .

What Went Wrong

• Revenue down 23.3% YoY in Q4 on customer cancellations and downsells; professional services also declined YoY .
• GAAP net loss deepened to $112.1M in Q4, driven by $56.9M goodwill impairment and $36.3M impairment of intangibles/other assets .
• 2025 outlook points to continued sequential revenue declines through most of the year with elevated attrition in 1H25; gross margin to face pressure from cloud migration costs (GCP) .

Financial Results

Headline P&L vs prior quarters

Notes:

• Q2 GAAP net income included a $73.1M gain on debt extinguishment, inflating GAAP profit that quarter .

Disaggregated revenue

KPIs and operating metrics

Guidance Changes

Context: Management flagged ~$3M of favorable Q4 deal timing that will not recur in Q1, explaining part of the sequential revenue step-down; even excluding that, Q1 sequential decline would be ~$6M due to prior cancellations .

Earnings Call Themes & Trends

Management Commentary

• “2024 was a transformative year… three consecutive quarters of bookings increases, strong adoption of our Generative AI features and the launch of our voice and digital strategy.” — CEO John Sabino .
• “We are seeing increasing demand for AI agents and AI orchestration… traction… in regulated industries, and growing interest from partners… we expect to see continued improvement in the business in 2025.” — CFO/COO John Collins .
• “In Q4, we saw a 17% sequential increase in the number of customers leveraging our generative AI and a 37% sequential increase in conversations using our gen AI suite.” — CEO John Sabino .
• “On the Avaya partnership, we are going in the right direction. We've closed over a 7‑figure deal… agreed target accounts… and helped Avaya retain customers.” — CEO John Sabino .
• “We expect revenue to decline through most of the year before reaching an inflection point for sequential growth by the end of the year.” — CFO/COO John Collins .

Q&A Highlights

• Partner attach: Management targeting ~35% partner‑led bookings in 2025; this would be more than 2x current levels .
• Avaya/Cisco/Amazon Connect: 7‑figure Avaya deal closed; pipeline progressing; Cisco and Amazon Connect integrations planned to extend reach to ~65% of voice TAM .
• Profitability vs growth: No net increase in S&M spend vs 2024; company reallocated cost reductions to preserve S&M capacity to drive bookings .
• Gross margin: Q4 expansion aided by fewer consultants and lower labor in Gainshare; 2025 GM to face pressure from cloud migration (GCP) .
• Churn/renewals: Legacy renewal cycle largely completes by 1H25; majority of signaled customer losses concentrated in Q1; retention expected to normalize thereafter .
• Product fit: Customers can avoid full CCaaS/CRM overhauls; LivePerson layers best‑in‑class digital and AI capabilities over existing stacks .

Estimates Context

• We attempted to retrieve Wall Street consensus (S&P Global) for Q4 2024 and forward periods; data was unavailable due to provider rate limits at the time of request. As a result, we cannot present vs‑consensus comparisons in this report. Company results were above the high end of internal guidance on revenue and adjusted EBITDA for Q4 .

Key Takeaways for Investors

• Quality beat vs guidance with sequential commercial improvement, but headline revenue remains under pressure from prior churn; watch bookings growth sustainability and NRR trajectory through 1H25 .
• Large non‑cash impairments drove a sizable GAAP loss; non‑GAAP adjusted EBITDA performance indicates underlying cost discipline and operating progress .
• Voice strategy is gaining traction (Avaya win; Cisco/Amazon Connect next), expanding access to on‑prem and cloud voice ecosystems without requiring disruptive CCaaS swaps — a differentiator in enterprise accounts .
• Generative AI adoption continues to scale across the base with measurable operational and revenue outcomes; provides a multi‑year upsell and efficiency lever .
• 2025 guide is conservative on profitability (no positive FCF expected) to prioritize bookings growth and platform investments — key for medium‑term ARR inflection by 2H25/YE25 .
• Near‑term risks: elevated attrition in Q1, gross margin headwinds from GCP migration, and macro/competitive dynamics in contact center tech .
• Trading setup: stock likely sensitive to evidence of bookings acceleration, partner attach toward ~35%, and confirmation of churn normalization by mid‑year; any upside to Q1 guide (given $3M Q4 deal‑timing pull‑forward) would be a positive surprise .

Appendix: Additional Financial Details (Q4 2024)

• Disaggregated revenue: hosted services $60.216M; professional services $12.990M .
• Cash and equivalents: $183.2M at 12/31/24 .
• Non‑GAAP reconciliations: Adjusted operating income of $1.0M; Adjusted EBITDA of $8.1M with detailed exclusions (taxes, litigation/consulting, restructuring, amortization, impairments, SBC, leadership transition, financing items, etc.) .
• Selected balance sheet items: Total liabilities $675.1M; stockholders’ equity $(67.3)M .