LivePerson's Q1 Earnings Call Highlights Growth, Challenges and Guidance

LivePerson's Q1 earnings call presented a mixed sentiment, with revenue and EBITDA exceeding guidance, 14% growth in AI tool adoption, and significant customer wins. However, the company faced revenue decline, net revenue retention issues, and elongated sales cycles. LivePerson reaffirmed its full-year revenue guidance of $240-255 million, with a focus on driving commercial performance and accelerating product innovation.

LivePerson Inc. (NASDAQ: LPSN) reported mixed results for Q1 2025, with revenue and EBITDA exceeding guidance, but facing revenue decline and net revenue retention issues. The company's earnings call highlighted significant growth in AI tool adoption and customer wins, but also noted elongated sales cycles and a challenging macroeconomic environment.

Key Financial Highlights:
- Revenue: $64.7 million, above the midpoint of guidance range [2].
- Adjusted EBITDA: $0.2 million, surpassing the high-end of guidance range [2].
- Recurring Revenue: $60.4 million, representing 93% of total revenue, down 22% year over year [2].
- Professional Services Revenue: $9.6 million, down 30% year over year [2].
- Net Revenue Retention: 80% in Q1, down from 82% in Q4 [2].
- Full-Year Revenue Guidance: Reaffirmed at $240 million to $255 million [2].
- Q2 Revenue Guidance: Expected to range from $57 million to $60 million [2].
- Q2 Adjusted EBITDA Guidance: Expected loss of $4 million to $2 million [2].

Positive Points:
- Revenue from generative AI tools increased by 14%, and conversations powered by AI grew by 25% sequentially [2].
- The company signed 50 deals in the first quarter, including 5 new logos and 45 expansions and renewals, marking a 25% increase quarter-over-quarter [2].
- LivePerson is launching an integration with Amazon Connect, which is expected to enhance their go-to-market strategy and customer engagement capabilities [2].

Negative Points:
- Revenue from hosted services decreased by 23% year-over-year [2].
- Professional services revenue fell by 30% year-over-year [2].
- Net revenue retention was 80% in the first quarter, down from 82% in the previous quarter [2].
- The company experienced extended enterprise buying cycles, causing several large deals to shift from Q1 to Q2 [2].

Outlook:
LivePerson expects sequential declines in revenue through most of the year before reaching an inflection point by the end of the year. The company does not expect positive free cash flow in 2025, despite efforts to improve the cost structure. LivePerson is focusing on driving commercial performance and accelerating product innovation, particularly in AI capabilities.

Stock Performance:
LivePerson's stock price closed at $0.78, down -44.65% in the last 3 months and up 23.03% in the last 12 months [3].

References:
[1] https://finance.yahoo.com/news/liveperson-inc-lpsn-q1-2025-073432941.html
[2] https://finance.yahoo.com/news/liveperson-earnings-missed-by-018-revenue-fell-short-of-estimates-4072268
[3] https://uk.investing.com/news/earnings/liveperson-earnings-missed-by-018-revenue-fell-short-of-estimates-4072268