Earnings call transcript: LivePerson’s Q2 2025 results show mixed performance

LivePerson Inc. (LPSN) reported its financial results for the second quarter of 2025, revealing a mixed performance against market expectations. The company’s earnings per share (EPS) came in at -$0.17, slightly better than the forecasted -$0.19, while revenue of $59.6 million fell short of the expected $61.63 million. Following the announcement, LivePerson’s stock declined by 3.31% in after-hours trading, closing at $1.21. According to InvestingPro data, the company carries a significant debt burden of $528.86 million and has been rapidly burning through cash, with negative EBITDA of $16.86 million in the last twelve months.

Key Takeaways

• LivePerson’s EPS beat expectations, but revenue fell short.
• Stock price dropped 3.31% in after-hours trading.
• Revenue guidance for the full year was revised down by 5% to $235 million.
• Strategic partnerships with Google Cloud and Databricks were highlighted.
• The company increased its full-year adjusted EBITDA guidance.

Company Performance

LivePerson’s Q2 2025 results highlighted a challenging environment, with revenue slightly above the midpoint of its guidance but below market expectations. Despite the revenue miss, the company reported an adjusted EBITDA of $2.9 million, exceeding the high-end of its guidance. The company continues to focus on innovation, particularly in AI, which has shown significant growth in customer engagement.

Financial Highlights

• Revenue: $59.6 million (slightly above guidance midpoint)
• EPS: -$0.17 (beat forecast of -$0.19)
• Adjusted EBITDA: $2.9 million (exceeded high-end of guidance)
• Recurring Revenue: $55 million (92% of total revenue)
• Average Revenue per Customer: $655,000 (4% YoY increase)

Earnings vs. Forecast

LivePerson’s EPS of -$0.17 surpassed the forecasted -$0.19, representing a surprise of 10.53%. However, the revenue of $59.6 million missed the forecasted $61.63 million by 3.29%. This mixed performance reflects ongoing challenges in the market and the company’s strategic adjustments.

Market Reaction

Following the earnings release, LivePerson’s stock fell by 3.31% in after-hours trading, closing at $1.21. The stock’s movement reflects investor concerns over the revenue miss and the downward revision of full-year guidance. The stock remains closer to its 52-week low of $0.6102, indicating ongoing market skepticism. InvestingPro analysis indicates the stock is currently undervalued, despite showing strong returns of 34.6% over the past week. Subscribers to InvestingPro can access 11 additional key insights about LPSN, including detailed valuation metrics and financial health scores.

Outlook & Guidance

LivePerson revised its full-year revenue guidance to $235 million, down 5% from previous estimates. The company expects Q3 revenue to be between $56 million and $59 million. Despite the revenue guidance cut, LivePerson increased its full-year adjusted EBITDA guidance to $2 million positive, reflecting cost management efforts.

Executive Commentary

CEO John Sabino emphasized the company’s focus on transforming customer interactions through AI, stating, "We are empowering enterprises to transform customer interactions into real business outcomes." CFO/COO John Collins highlighted decisive actions taken to address stakeholder concerns, noting, "We have taken decisive action to address concerns expressed by customers, shareholders, and employees."

Risks and Challenges

• Macroeconomic Uncertainty: Ongoing economic challenges could impact enterprise spending.
• Extended Buying Cycles: Longer decision-making processes in enterprises may delay revenue recognition.
• Competition: New AI bot capabilities from competitors pose a threat.
• Technology Transition: The ongoing Google Cloud migration presents operational risks.

Q&A

During the earnings call, analysts inquired about the impact of debt refinancing on customer conversations and challenges with enterprise renewals. Executives also discussed progress in technology partnerships with Google Cloud and Databricks, which are expected to enhance the company’s market positioning.

Full transcript - LivePerson Inc (LPSN) Q2 2025:

Diego, Conference Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson’s Second Quarter twenty twenty five Earnings Conference Call. My name is Diego, and I will be your conference operator today. At this time, all participants are in a listen only mode.

After the prepared remarks, the management team from LivePerson will conduct a question and answer session, and conference participants will be given instructions at that time. To give everyone the opportunity to participate, please limit yourself to one question and one follow-up. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Mr. John Paracchio, Vice President, Investor Relations.

John Paracchio, Vice President, Investor Relations, LivePerson: Thank you, Diego. Joining me on today’s call is John Sabino, CEO and John Collins, CFO and COO. Please note that during today’s call, we will make forward looking statements, which are predictions, projections and other statements about future results. These statements are based on our current expectations and assumptions as of today, 08/11/2025, and are subject to risks and uncertainties. Actual results may differ materially due to various factors, including those described in today’s earnings press release and in the comments made during this conference call, as well as in 10 Ks, 10 Qs and other reports we file with the SEC.

We assume no obligation to update any forward looking statements. Also during this call, we’ll discuss certain non GAAP financial measures. A reconciliation of GAAP to non GAAP financial measures is included in today’s earnings press release. Both the press release and supplemental slides, which include highlights for the quarter, are available on the Investor Relations section of LivePerson’s website, ir.liveperson.com. With that, I’ll turn the call over to LivePerson’s CEO, John Sabino.

John Sabino, CEO, LivePerson: Thank you so much, John. Thank you all for joining us today. Before discussing our results and business updates, I’ll be outlining the refinancing agreement with the twenty twenty six noteholders announced today. I want to start here because strengthening our capital structure has been a top priority since I joined the company. Building on last year’s successful transaction with Lynn Rock Lake, I am pleased to share that this refinancing agreement represents a decisive step in strengthening our capital structure.

It meaningfully de levers our balance sheet and extends debt maturities to 2029, providing a runway to execute our strategy. Equally important, it reinforces confidence in our customers and partners that LivePerson remains a long term strategic partner. Refinancing is also intended to shift a greater proportion of enterprise value to equity holders by significantly reducing total indebtedness. Now let me turn to our operational performance. We delivered revenue of $59,600,000 which was above the midpoint of our guidance range.

Our adjusted EBITDA also came in at 2,900,000.0 exceeding the high end of our guidance range. John Collins will provide more detail about our financials shortly. Now I want to provide some color on our product strategy. In second quarter, we experienced a 45% sequential increase in conversations powered by our generative AI suite. In fact, over 17% of all conversations on LivePerson’s platform leverage at least one form of generative AI feature, up five percentage points from a quarter ago.

This increased adoption reflects a clear and measurable value that we are delivering by helping customers improve efficiency and elevate their customer experience. We’re also seeing exciting new customer use cases emerge, which further validates our product strategy. As we continue to evolve our platform to be a true system of action intelligence, we’re empowering enterprises to transform customer interactions into real business outcomes. Our vision is to embed AI into every interaction. And we achieve this with an open flexible workspace powered by our leading tools and automation, real time transcription and agent assistance.

The true value of our platform is demonstrated by our customer success. So let me share a few examples of what they’re achieving. First, a premier diagnostic provider deployed our routing AI agent bot and within three weeks saw a significant decrease in call volumes, while increasing messaging volumes by 7x demonstrating rapid adoption and scalability, while achieving a 97% routing accuracy and an 86% CSAT score. We’re also using AI powered summarization to automate CRM updates, improving agent efficiency. Second, a major media technology company is using our AgenTik AI powered routing to fully contain 20% of conversations without human intervention, while achieving an eighty six percent first contact resolution rate and an 89% CSAT score.

And third, a leading technology services organization dramatically cut escalations and decreased resolution times by using our AI routing. This was possible because our AI is now far better at understanding what customers are asking for, reducing errors by 38% and resolving 62% more unique requests on the first try. These are examples with industry leading brands and are not isolated cases. They are clear proof that our AI is delivering mission critical business outcomes. Next, I want to highlight that our product strategy is being matched by a focused evolution in how we go to market, with our strategic partnerships playing a central role.

Just last week, we announced that we’re deepening our relationship with Google Cloud. This collaboration unifies our market leading conversational platform and operations with Google Cloud’s AI innovations, including their advanced large language models. This isn’t just about integrating features. We’re shifting to encompass a joint global go to market initiatives and collaborative product innovation. This will allow us to jointly redefine enterprise customer experience and accelerate our mission to create a new era of highly efficient, personalized and connected experiences worldwide.

This strategic alliance is built on the foundation of our ongoing migration to Google Cloud. This long term initiative is about optimizing our services on a state of the art stable infrastructure. This not only improves resiliency, but frees up our engineers from managing underlying complexity to focus on delivering value to our customers. In fact, the partnership with Google and the high performance AI technologies made available through Gemini and Vertex are added benefits, which we are now well positioned to take advantage of. Building on our work with Google, we’ll be expanding our relationship with Databricks, which is foundational for our critical innovations.

By underlying our conversational data excuse me, by unifying our conversational data into a single extensible high performance system deployed within Google Cloud, we will unlock three key advantages. First, we can deliver smarter, faster outcomes for our clients in analytics and automation. Second, we can speed up how we build and iterate on AgenTik AI use cases. And third, enterprises and partners can securely build their own AgenTik AI solutions on top of our platform. Together, these partnerships make LivePerson’s platform more intelligent, extensible and attractive to enterprise buyers looking for proven AI capabilities.

We believe these strategic partnerships will amplify our market presence and enable us to deliver integrated solutions to a wider range of enterprises, reinforcing our position as a strategic partner for all channels. Turning to our commercial results and our outlook for the rest of the year. Second quarter bookings improved sequentially over Q1, but the overall pace of new business in the first half was slower than anticipated. We’ve also experienced renewal hesitation from a few larger customers. Two primary factors have contributed to this.

First, the broader macroeconomic uncertainty continues to extend enterprise buying cycles, especially for high value AI solutions. These transformative deployments naturally require extensive customer due diligence and this is what we see as extending these buying cycles. Second, uncertainty around our capital structure has been a clear headwind in our commercial process. Addressing that headwind was a top priority and the refinancing agreement directly addresses consistent customer and partner feedback on this issue by providing reassurance on the company’s financial stability. As a direct result of the commercial factors I’ve outlined, we’re adjusting our financial outlook.

Based on the slower bookings and renewal hesitation from a select large customers, we’re revising our full year revenue guidance to $235,000,000 at the midpoint, a decrease of approximately 5%. At the same time, we’re managing the business with financial discipline. Through significant adjustments to our cost structure and a focused approach to cash preservation, we’re offsetting top line declines. We are therefore increasing our full year adjusted EBITDA guidance midpoint to a positive $2,000,000 an increase of $9,000,000 John Collins will provide more detail on this shortly. With a stronger capital structure in place, we will continue to focus on product innovation that drives meaningful business outcomes for our customers and our commercial progress.

This quarter, that focus showed up in 45% sequential growth in generative AI conversations and expanded strategic partnerships with Google and Databricks creating new momentum and opportunities. We have taken decisive action to address our challenges and strengthen the company. I’m confident that these steps have laid the groundwork for us to enhance our commercial performance continue executing on our strategy. Now let me hand the call over to John Collins, who will provide further details on our financials. John?

John Collins, CFO and COO, LivePerson: Thanks, John. I will cover a few key points on the refinancing agreement, followed by a discussion of customer wins, second quarter financial performance and then guidance. To begin, I’d like to take a moment to recap our multiyear strategy to deleverage the balance sheet. As many of you will recall, in June 2024, we closed the transaction with our largest note holder, Lynn Rock Lake, that strengthened the balance sheet through a combination of deleveraging and maturity extension. We consider this transaction to be the first of two phases in our debt reduction strategy.

Critically, Phase one also provided us with $100,000,000 of cash and the ability to issue second lien notes, both of which we expected to be necessary to execute Phase two of our strategy. That is the refinancing of the remaining $361,000,000 of notes due to mature in December 2026. Importantly, Phase one was also designed to address the growing friction in our commercial motion. Large enterprise customers who are making multiyear technology investments with LivePerson, in some cases, three to five year commitments, we’re increasingly hesitant to transact with the company because of its perceived financial instability. Phase one enabled us to demonstrate for customers tangible progress on the execution of our strategy to strengthen the balance sheet and overall financial profile.

Jumping ahead to the 2025, with next year’s $361,000,000 debt maturity and looming large in the minds of all LivePerson constituencies, our commercial progress slowed relative to our previous expectations. With the successful execution of Phase two, we have addressed a primary concern expressed by customers, employees and shareholders alike. More specifically, as announced today, we have reached an agreement with our 2026 noteholders to exchange $341,000,000 of notes maturing in December 2026 or $45,000,000 in cash, 115,000,000 in second lien notes maturing in 2020 nine and thirty nine percent of equity, with part of the equity delivered at closing and the balance delivered through convertible preferred stock that is mandatorily convertible upon a shareholder vote. In total, this exchange captures $181,000,000 of debt discount that accretes to shareholders and delevers the balance sheet by $226,000,000 shifting a greater proportion of enterprise value to shareholders and providing the company with time to execute strategy, which we believe will reinforce LivePerson’s position as a long term strategic partner to customers and further enhance value creation for shareholders. Turning to the quarter, in terms of deals and significant customer wins, we signed a total of 38 deals in the second quarter, including three new logos and 35 expansions and renewals, translating to a quarter over quarter increase in deal values of 15%, but a year over year decline of 9%.

Consistent with recent themes, we observed continued demand for AI agents and AI orchestration within highly regulated industries such as healthcare, financial services and telecommunications, which leverage our platform as a trusted AI agnostic orchestration engine. Significant renewals and expansions included a 7 figure deal with a global financial services company, a major European retailer, one of Australia’s largest retail groups and a leading US health plan provider. We also added a European digital marketing agency as a new logo. Despite the sequential increase in bookings in the second quarter, overall commercial progress in the first half of the year was slower than anticipated, which will impact our outlook for the second half. We attribute slower bookings and renewal challenges to two primary factors.

As discussed, first, increasing concerns from enterprise customers regarding the financial stability of the company, especially considering the $361,000,000 debt maturity next year, which became a key agenda item for nearly every enterprise buyer in the first half. And second, macroeconomic uncertainty that continues to constrain budgets and extend buying cycles, especially for high value AI solutions. Decision making has slowed with the influx of new AI offerings and the establishment of AI committees and related compliance processes, which have introduced new decision makers. Turning to our second quarter results, total revenue was $59,600,000 or just above the midpoint of our guidance range. Adjusted EBITDA was $2,900,000 which was above the high end of our guidance range, driven by ongoing cost discipline and operational efficiencies.

Revenue from hosted services was $50,300,000 down 25% year over year. Recurring revenue was $55,000,000 or 92% of total revenue. Further segmenting revenue, professional services revenue was $9,300,000 down 26 year over year. From a geographic perspective, U. S.

Revenue was $36,700,000 and international revenue was $22,900,000 or 6238% of total revenue, respectively. Average revenue per customer was 655,000 up 4% year over year, driven in part by expansions with our largest customers and in part by customer retention. RPO declined to $197,000,000 consistent with the same factors driving declines in revenue. Net revenue retention was 78% in the second quarter, down 80% from the first quarter. As a reminder, net revenue retention is a function of in period revenue, but this metric will continue to decline until revenue begins to grow again.

Finally, in terms of cash, we ended the second quarter with $162,000,000 of cash on the balance sheet, inclusive of the proceeds from the transaction with Lindrock Lake last year. In terms of guidance, while the refinancing agreement announced today addresses a primary concern customers have consistently cited during commercial discussions, renewal friction and slower than expected bookings in the first half caused us to revise down our outlook for the second half. In terms of revenue for the full year, we are lowering our range to $230,000,000 to $240,000,000 which translates to a decrease of approximately 5% at the midpoint. As for the third quarter, we expect revenue to range from $56,000,000 to $59,000,000 representing a sequential decline of approximately $2,000,000 at the midpoint relative to the second quarter. In terms of revenue mix, we expect recurring revenue to be approximately 93 of total revenue for both the third quarter and the full year.

As for the bottom line, we continue to balance our cost structure and expected business performance with a focus on preserving cash and reallocating resources to both deliver on innovations for customers and modernize our architecture through GCP migration, which is also essential for our customers. As a result, we now expect to deliver positive adjusted EBITDA for the full year. Accordingly, we are raising our full year guidance to a range of a loss of $3,000,000 to a profit of 7,000,000 This represents a significant improvement from our prior range of a loss of 14,000,000 to 0 Finally, we expect adjusted EBITDA in the third quarter to range from a loss of $4,000,000 to a loss of $2,000,000 Before moving to questions, I’ll briefly emphasize that we have taken decisive action to address concerns expressed by customers, shareholders and employees regarding our financial stability. While commercial progress in the 2025 was impacted by customer concerns and macroeconomic uncertainty, The company remains focused on execution, innovation and cost discipline. And we now have the runway for these strategic efforts to enhance value creation for shareholders and reinforce customer confidence in LivePerson as a long term strategic partner.

And with that, we can move to Q and A.

Diego, Conference Operator: Thank you. And at this time, we will conduct our question and answer session. To give everyone the opportunity to participate, please limit yourself to one question and one follow-up. If you would like to ask a question, please press star, one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.

You may press 2 if you would like to remove your question from the queue. That line question And our first question comes from Jeff Van Rhee with Craig Hallum Capital Group. Please state your question.

Jeff Van Rhee, Analyst, Craig Hallum Capital Group: Hey there, guys. So a couple for me. Just maybe on the new logo capture, John S. Yes, new logo capture for the quarter, understood on the macro, in the deals that you’re getting into, talk to the win rates and how it is going if you’re able to get into those deals and deals that are closing? How are your win rates trending?

John Sabino, CEO, LivePerson: Hey, Jeff, good to hear from you. We’re still staying relatively consistent from quarter to quarter. Again, we see many of the we’ve seen RFPs push out on decision making in some cases. We’ve also we still have not seen composition from platform providers still beating us out, but we’re seeing the expected closing for some of these deals really just pushing out into the future where they’re rewriting the RFP or changing scope. And so that’s so some of these opportunities that we thought that we’d land here in 2Q have now continued to push out into Q3

So that’s what we’re seeing right now. It’s not being defeated by competitors per se. That’s rate that is staying relatively consistent to what we’ve seen in the past. This just seems to be continued delayed decision making or rescoping on what we’ve seen specifically for Q2.

Jeff Van Rhee, Analyst, Craig Hallum Capital Group: Yes. It’s I think John Collins called out some new AI based competitors showing up and lengthening cycles. Just talk to me about that. What are you seeing there?

John Sabino, CEO, LivePerson: Yes. We’re seeing again, we’re seeing newer competitors, smaller competitors offering AI bot capabilities and this is part of our expansion motion with customers and or new opportunity and we’re seeing increased headwinds there.

Jeff Van Rhee, Analyst, Craig Hallum Capital Group: Okay. And then on the renewal side, I just seemed like a little more I think you mentioned a couple large customers. I think there’s a little bit of emphasis on large customers being the issue there on the renewals front. Just it was is that in fact what you’re seeing most of the pressures there coming in the big customers? And if so, what do you think that’s the case?

John Sabino, CEO, LivePerson: Yes. That’s so we have seen some of the customers, our largest ones who are making enterprise buying decisions 24, 36 were further months out. And so the financial concerns prompted us to make sure that we’re looking forward at this debt deal and trying to remove that as a challenge in renewing these customers. So we’re hoping that this has a positive effect on those conversations going forward.

Diego, Conference Operator: Okay, I’ll leave it there. Thank you.

John Sabino, CEO, LivePerson: Thanks, Jeff.

Diego, Conference Operator: Thank you. And your next question comes from Ryan MacDonald with Needham and Company. Please state your question.

Ryan MacDonald, Analyst, Needham and Company: Thanks for taking my questions. Congrats on the deleveraging transaction. Maybe just to double click on the renewal side or the pressures you’re seeing. Can you talk about sort of what the greater impact is, whether it’s macro uncertainty relative to the sort of balance sheet issues? And I guess on these concerns that you’re now sort of alleviating and finding a resolution for, Do you still have opportunities with those customers that shared those concerns on that sort of the capital structure that you can kind of get back into the conversation?

Or are those sort of lost opportunities and sort of improving moving forward? Thanks.

John Sabino, CEO, LivePerson: Yes, Ryan, thanks for the question. I’ll start, John, if you want to add some context, please feel free. Those comments specifically refer to some of our customers that we’re looking at for renewal and expansion with. And the positive news there is that this allows us to improve and continue those conversations versus a churn at this point. So we’re hoping that putting together the debt deal that we’ve announced today will help us improve those conversations.

So those two are connected and we think that that is going to help us. So these have not been outright losses or churns at this point, but it has impacted decision making. It has allowed for other solutions to be looked at and it has compromised our ability to close some of our longer term contracts with some of our enterprise customers. And we’re hoping that, again, going back to this debt deal and why we think it’s important and we think it’s good for our customers and shareholders, it removes that uncertainty and it gets it back to the technology where we’re engaging with customers, which is where we excel.

John Collins, CFO and COO, LivePerson: I’ll just add Ryan that the you asked about the concerns relative on a relative basis, balance sheet versus macro. And I would simply add that they’re not necessarily mutually exclusive in our situation, the balance sheet and the overall perception of financial instability more greatly exposes us to competition, as you might imagine. So they are interrelated in that sense. And then I would also simply reinforce what John said, which is there are several specific deals with large customers that we believe this deal will keep us in the conversation on.

Ryan MacDonald, Analyst, Needham and Company: Excellent. Okay. Appreciate the color on that. And then on the technology side, great to hear about the deepening relationship with Google Cloud and sort of expanding your relationship with Databricks. Can you just talk about when you expect sort of the migration to be fully completed with both?

Sounds like obviously that’s going to open up new a lot more capabilities, functionality for LivePerson and for their customers. So when should we expect that sort of to be fully completed and starting to benefit LivePerson from a buying cycle perspective, adoption cycle? Thank you.

John Sabino, CEO, LivePerson: For some of our customers in some regions, they’ll see that this year around the October timeframe and we should be complete with early next year with most of the migration. That being said, we’re already in working with Google creating the capabilities with Vertex and Gemini and doing robust testing on that with those with that tooling on our capabilities already in those integrations. So customers will start seeing benefits from that hopefully even before the end of the year.

Diego, Conference Operator: Excellent. I’ll hop back in the queue. Thank you. We’ll pause for a few moments, while we pull up for questions. And ladies and gentlemen, there appears to be no additional questions at this time.

We have reached the end of our call today. Thank you for joining us, and all parties may

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