LivePerson's Q3 2025 Earnings Call: Contradictions in Win Rates, Renewal Impact, and Strategic Priorities

Date of Call: November 10, 2025

Financials Results

• Revenue: $60.2M, above the high end of guidance ($60M); slight sequential increase driven by variable revenue and timing of deal recognition

Guidance:

• Full-year revenue raised to $235M–$240M (up $2.5M at midpoint)
• Full-year adjusted EBITDA raised to $7.5M–$12.5M (up $8M at midpoint)
• Q4 revenue expected $50.5M–$55.5M; sequential decline partly due to timing that benefited Q3
• Q4 adjusted EBITDA expected $0M–$5M; adjusted EBITDA expected to exceed capital expenditures for the full year
• Recurring revenue expected to be ~93% of Q4 revenue

Business Commentary:

* Financial Performance and Stability: - LivePerson reported revenue of $60.2 million for Q3, exceeding the high end of their guidance range. - Adjusted EBITDA was $4.8 million, significantly exceeding the high end of their guidance range. - The financial stability was attributed to the successful debt refinancing agreement and cost restructuring, which alleviated customer concerns and improved financial confidence.

• Product Innovation and Market Momentum:
• Nearly 20% of all conversations on LivePerson's platform now use generative AI.
• LivePerson was recognized as a Niche Player in the 2025 Gartner Magic Quadrant for Conversational AI Platforms.

• This was driven by the company's strong product development, strategic partnerships (e.g., with Google), and innovation in AI solutions such as the Conversation Simulator.

• Commercial Performance and Renewals:

• LivePerson experienced a slight sequential increase in bookings and successfully renewed several large accounts.
• They also secured new upsell contracts with major accounts that had previously expressed concerns about financial stability.

• The improvement in commercial performance was due to increased customer confidence following the company's stabilization efforts and the positive impact of key technology partnerships.

• Cost Management and Efficiency:

• The company executed a cost restructuring to reduce cash burn, resulting in immediate benefits to adjusted EBITDA in Q3.

• LivePerson ended the quarter with $107 million of cash on the balance sheet.
• The cost management efforts were a part of the strategic plan to ensure efficiency and sustainability, contributing to the improved financial outlook.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • "results that were above the high end of our guidance ranges for both revenue and adjusted EBITDA"; management: "the debt refinancing ... resolves a concern" and "we are raising our full year revenue guidance range to $235 million to $240 million," highlighting stabilization, reduced cash burn and improving commercial momentum.

Q&A:

• Question from Daniel Hibshman (Craig-Hallum Capital Group LLC, Research Division): Could you give color on the upside to the quarter and what drove that (80/20)?
  Response: Upside was mainly timing—deals pulled into Q3—and variable revenue; improving customer confidence also began to restore bookings and expansions.

• Question from Daniel Hibshman (Craig-Hallum Capital Group LLC, Research Division): On the competitive landscape for Conversation Simulator, what are key peers and LivePerson's differentiation/right to win?
  Response: LivePerson's differentiation is a unified human-plus-bot simulator with in-workflow agent training, vertical conversational data, and an open architecture that can test any LLM or CCaaS.

• Question from Daniel Hibshman (Craig-Hallum Capital Group LLC, Research Division): Regarding restructuring and additional costs, did those occur in Q3 or will they layer into Q4, and do they explain the Q4 EBITDA beat?
  Response: Restructuring actions occurred in Q3; the full benefits are realized in Q4 and into FY26, and those cost reductions drive the Q4 EBITDA beat.

Contradiction Point 1

Win Rates and Sales Cycles

It involves statements about the consistency of win rates and the impact of competitors on sales cycles, which are crucial for understanding the company's sales performance and market positioning.

Can you provide details on the upside in the quarter and what drove it? - Daniel Hibshman (Craig-Hallum Capital Group LLC, Research Division)

2025Q3: We're seeing consistent win rates quarter-to-quarter. - John Sabino(CEO & Director)

How are win rates trending in current deals, and how are new AI competitors affecting sales cycles? - Jeffrey Van Rhee (Craig-Hallum Capital Group)

2025Q2: We're seeing consistent win rates quarter-to-quarter. - John Sabino(CEO & Director)

Contradiction Point 2

Impact of Financial Concerns on Renewals

It reveals how the company perceives and addresses the concerns of its enterprise customers regarding financial stability, which can affect customer retention and revenue.

What were the key factors behind the quarter's upside, and what was the primary driver? - Daniel Hibshman (Craig-Hallum Capital Group LLC, Research Division)

2025Q3: The upside is characterized as timing, with some deals that would have otherwise taken place in the fourth quarter now in the third. - John Collins(CFO, COO, and Principal Accounting Officer)

Are the renewals focused on large customers, and is the pressure primarily from there? - Jeffrey Van Rhee (Craig-Hallum Capital Group)

2025Q2: Some of our largest customers are extending enterprise buying cycles. Financial concerns are prompting us to address the debt deal to improve renewal conversations. - John Sabino(CEO & Director)

Contradiction Point 3

Deal Timing and Closure

It involves the timing and closure of deals, which directly impacts revenue expectation and financial projections.

What were the key drivers behind the upside in the quarter? - Daniel Hibshman(Craig-Hallum Capital Group LLC, Research Division)

2025Q3: The upside is characterized as timing, with some deals that would have otherwise taken place in the fourth quarter now in the third. - John Collins(CFO, COO, and Principal Accounting Officer)

What is the status of deals delayed from Q1 to Q2? Is macroeconomic uncertainty impacting these deals? - Ryan MacDonald(Needham & Company)

2025Q1: We are on track to close these slipped deals within Q2, with specific close plans in place. - John Sabino(CEO)

Contradiction Point 4

Macro Environment Impact on Sales

It involves the impact of the macroeconomic environment on sales cycles and deal closures, influencing revenue expectations and strategic planning.

What were the primary drivers behind the upside in this quarter's performance? - Daniel Hibshman(Craig-Hallum Capital Group LLC, Research Division)

2025Q3: It's certainly true that we're seeing some impact in our sales cycle from the macro economic environment. - John Sabino(CEO)

What progress is being made on Q1 deals delayed to Q2? Is the uncertain macroeconomic environment impacting these deals? - Ryan MacDonald(Needham & Company)

2025Q1: The macro environment may be playing a role in general sales cycle elongation, but the impact on our Q1 deals is not clear at this time. - John Sabino(CEO)

Contradiction Point 5

Strategic Focus on Growth and Cost Management

It involves a shift in strategic priorities regarding sales and marketing investments and overall cost reduction, which impacts the company's growth trajectory and financial management.

Did the restructuring costs mentioned by John occur in Q3 or Q4? What is the scale of these costs? Given Q4 EBITDA guidance exceeds the Street by a few million, is the sequential OpEx change driving this beat? - Daniel Hibshman (Craig-Hallum Capital Group LLC, Research Division)

2025Q3: There's no incremental investment relative to 2024. We've left more in S&M while reducing overall costs to support growth plans for 2025. - John Collins(CFO, COO)

What percentage of customers or revenue has completed the renewal cycle, and what remains? - Mike Latimore (Northland Capital Markets)

2024Q4: There's no incremental investment relative to 2024. We've left more in S&M while reducing overall costs to support growth plans for 2025. - John Collins(CFO, COO)