LivePerson's Q3 2024 Earnings: Navigating Challenges and Opportunities

LivePerson Inc (LPSN) recently reported its third-quarter 2024 earnings, revealing a mix of positive and negative developments. While the company surpassed revenue and adjusted EBITDA expectations, it also faced challenges with customer attrition and revenue declines. This article delves into LivePerson's Q3 performance, its strategic initiatives, and the investment implications.

LivePerson's revenue for the third quarter was $74.2 million, above the high-end of its guidance range, while adjusted EBITDA came in at $7.3 million, also exceeding expectations. The company signed 44 deals, including two seven-figure agreements, and saw a 5.9% increase in trailing-twelve-months average revenue per enterprise and mid-market customer (ARPC) to $630,000. These positive results demonstrate LivePerson's ability to execute against its guidance and maintain growth momentum.

However, LivePerson also faced headwinds during the quarter. Revenue from B2B hosted services declined by 27% year-over-year, primarily due to customer cancellations and downsells. Net revenue retention dropped to 79% in the third quarter, down from 83% in the second quarter. The company acknowledged ongoing customer attrition and expects significant risk of customer churn in the fourth quarter and the first quarter of 2025.



LivePerson's strategic initiatives, such as its unified omnichannel solution and generative AI adoption, have driven growth and enhanced its competitive position. The Avaya partnership has translated into bookings and generated a strong pipeline with Fortune 500 companies. The company's new pricing and packaging model has also contributed to larger deals and shorter sales cycles. These strategic moves have helped LivePerson elevate its position from a trusted digital partner to a strategic partner across all channels.



Investors should consider LivePerson's long-term prospects and the potential for its strategic initiatives to drive growth. While the company faces near-term challenges, its focus on innovation, strategic partnerships, and customer success bodes well for its future. As an income-focused investor, one might consider LivePerson as a potential addition to a portfolio, given its stable yields and potential for capital gains.

In conclusion, LivePerson's Q3 2024 earnings results highlight the company's ability to execute against guidance and maintain growth momentum. However, the company also faces near-term challenges with customer attrition and revenue declines. Investors should monitor LivePerson's progress and evaluate its strategic initiatives as the company navigates these challenges and pursues opportunities for growth.