Summary
LivePerson reported third quarter fiscal 2021 revenue of $118.3 million, up 24.8% from the prior-year quarter. Business operations revenue grew 26% year over year, and consumer operations revenue grew 16%. The company signed seven seven-figure deals and 102 deals in total, comprising 37 new and 65 existing customer contracts. It also signed the largest 8-figure contract in its history. New customer wins included one of the largest sporting goods retailers in the world, one of the ten largest healthcare companies in the world, one of the three largest banks in Australia, a leading designer apparel brand in the U.S., and a major telecommunications services provider in Southeast Asia. The company also expanded business with a multi-billion dollar entertainment and media conglomerate, one of the largest news media companies in the U.S., one of the world's largest telco companies, one of the world's biggest beauty and cosmetics companies, and one of the largest cryptocurrency exchanges in the world. Trailing-twelve-months average revenue per enterprise and mid-market customer rose 34% to $570,000, up from approximately $425,000 in the comparable prior-year period. Revenue retention for enterprise and mid-market customers on Conversational Cloud was within the 105% to 115% target range in the third quarter of 2021, after exceeding that range in the third quarter of 2020.
The top line expanded, but GAAP profitability remained negative. Operating loss was $20.8 million, narrowed from $35.1 million in the prior-year quarter. Operating margin improved to -17.6% from -37.1%. Net loss was $32.8 million, and diluted EPS was -$0.47, compared with a net loss of $38.7 million and diluted EPS of -$0.58 in the prior-year quarter. On a non-GAAP basis, adjusted operating loss was $33,000, compared with adjusted operating income of $9.1 million. Adjusted EBITDA was $6.9 million, or $0.09 per share, down from $15.1 million, or $0.20 per share. The adjusted EBITDA decline reflects higher costs and investments in go-to-market capacity and product development. Deferred revenue was $102.9 million, up 13.9% from the prior-year quarter. Remaining performance obligations were $370.3 million, up 56.0% from the prior-year quarter. Approximately 92% of remaining performance obligations is expected to be recognized during the next 24 months.
LivePerson closed two strategic acquisitions, VoiceBase and Tenfold, to accelerate its voice product roadmap. Management expects these deals to create glide paths to new logo acquisition and expansion within the base. The company also invested in public cloud migration and hired more data scientists and machine learning engineers. These investments aim to drive revenue growth in 2022 and beyond. The company faces integration risk as it combines the acquired technologies and teams. It also faces strain on personnel and infrastructure from supporting a growing customer base. Competition in conversational AI remains intense. Privacy concerns and new regulatory requirements could affect the business. The ongoing COVID-19 pandemic continues to create uncertainty.
Management raised the midpoint of full-year 2021 revenue guidance, now calling for 27.7% to 28.5% year-over-year growth, up from a prior range of 26.5% to 28.5%. Fourth-quarter revenue guidance implies 19.6% to 22.6% year-over-year growth. Full-year adjusted EBITDA guidance was lowered to $11.9 million to $16.3 million, or a 2.6% to 3.5% margin, from $14.8 million to $22.8 million. Fourth-quarter adjusted EBITDA guidance is $(21.7) million to $(17.3) million, or a (17.8)% to (13.8)% margin. The revision primarily reflects the VoiceBase and Tenfold acquisitions and planned investments in go-to-market capacity and product innovation. Other risks include the company's ability to retain key personnel, attract new personnel, and manage staff attrition. The company also faces potential fluctuations in quarterly revenue and operating results, payment-related risks, and delays in implementation cycles.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2021 | Q4 FY2020 | QoQ | Q1 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $107.9M | $102.1M | +5.6% | — | — |
| Gross profit | $74.4M | $74.1M | +0.4% | — | — |
| Gross margin | 68.9% | 72.5% | -3.6 pp | — | — |
| Research & development | $33.5M | $28.0M | +19.5% | — | — |
| Sales & marketing | $37.0M | $39.7M | -6.9% | — | — |
| General & administrative | $14.5M | $12.8M | +12.8% | — | — |
| Total operating expenses | $121.5M | $108.8M | +11.7% | — | — |
| Operating income (loss) | -$13.6M | -$6.7M | -104.3% | — | — |
| Operating margin | -12.6% | -6.5% | -6.1 pp | — | — |
| Net income (loss) | -$21.2M | -$13.3M | -59.9% | — | — |
| Net margin | -19.6% | -13.0% | -6.7 pp | — | — |
| Diluted EPS | -$0.31 | -$0.20 | -$0.11 | — | — |
| Customers | 400 | 400 | ±0.0% | — | — |
Risks
Interest expense rose 199% to $9.4 million in the quarter and 204% to $27.9 million for the nine months ended September 30, 2021, driven by interest attributable to the 2024 Notes and 2026 Notes, while other expense, net widened 159% to $9.5 million in the quarter.
The company reported a net loss of $32.8 million for the quarter and $75.1 million for the nine months ended September 30, 2021, and had an accumulated deficit of approximately $467.0 million as of September 30, 2021, with a history of net losses and negative cash flows in numerous past periods.
MD&A states that actual results could differ from estimates and assumptions based on impacts on the business and general economic conditions due to the current COVID-19 pandemic, and that the pandemic accelerated the shift to mobile messaging that the company views as a permanent structural change.
Revenue retention for enterprise and mid-market customers on the Conversational Cloud was within the 105% to 115% target range in the third quarter of 2021 but exceeded the target range in the third quarter of 2020, indicating a deceleration in expansion within the installed base.
Cost of revenue - business increased 43% to $37.1 million in the quarter and 46% to $106.9 million for the nine months ended September 30, 2021, primarily from business services and outsourced subcontracted labor of approximately $7.7 million and $24.1 million, respectively, driven by Health and Gainshare services.
Goodwill increased by $45.1 million in the nine months ended September 30, 2021 with the acquisition of e-bot7, and management must make assumptions regarding estimated future cash flows; changes in those estimates or assumptions could require an impairment charge.
International revenue contribution fell to 34% of total revenue for the nine months ended September 30, 2021, down from 38% in 2020 and 41% in 2019, even as the company cites international expansion as a key strategic focus and motivation for the e-bot7 acquisition.
Product development costs increased 51% to $41.7 million in the quarter with product development headcount up 23% to 574 at period end, reflecting heavy investment in hiring data scientists and machine learning engineers for Conversational AI.
The company is subject to legal proceedings and litigation arising in the ordinary course of business, and MD&A notes that revisions to estimated liabilities could have a material effect on results of operations, with litigation and consulting costs of $0.6 million in the quarter and $4.8 million for the nine months ended September 30, 2021.
SaaS KPIs
All quarters →Adjusted EBITDA
Free Cash Flow
Total Customers
Remaining Performance Obligations
Summary, forecast, risks and KPIs are extracted from LIVEPERSON INC's SEC filings for Q1 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.