LIVEPERSON INC Q1 FY2022 earnings

LivePerson reported first quarter revenue of $130.2 million, up 20.7% from $107.9 million in the prior-year quarter. Business segment revenue rose 22% year over year, while Consumer revenue rose 1%. Hosted services drove the increase, including roughly $8.8 million of revenue that varies with interaction and usage. The company signed five seven-figure deals and 102 contracts in the quarter, split between 26 new and 76 existing customers. Trailing-twelve-month average revenue per enterprise and mid-market customer reached $645,000, up 32% from about $490,000 a year earlier. Conversational Cloud volume grew 34% year over year for AI-based messaging conversations and 27% for total messaging conversations.

Profitability moved the other way. The operating loss was $65.1 million, wider than the $13.6 million loss a year earlier, and operating margin fell to negative 50.0% from negative 12.6%. Net loss was $65.4 million, or $0.86 per diluted share, against a net loss of $21.2 million, or $0.31 per diluted share, in the prior-year quarter. The gap between GAAP and adjusted results stays wide. Adjusted operating loss was $24.9 million, compared with adjusted operating income of $6.7 million a year ago, and adjusted EBITDA was negative $17.6 million against positive $13.3 million. Headcount expanded sharply, with sales and marketing at 701 people at period end versus 312 a year earlier and product development at 674 versus 501. Management tied much of the expense growth to the 2021 acquisitions of e-bot7, VoiceBase and Tenfold and the February 2022 purchase of WildHealth.

Cash generation reversed. Operating cash flow was negative $22.9 million for the quarter, down from $25.2 million a year earlier. Free cash flow, which the company defines as operating cash flow less purchases of property and equipment, was negative $36.0 million, compared with positive $14.6 million. Capital expenditures rose 23.6% to $13.1 million. Deferred revenue, current portion only, was $112.3 million, up 3.6% year over year, and remaining performance obligations climbed 35.5% to $448.0 million. Management expects about 91% of that backlog to be recognized within the next 24 months. The company framed the period as early progress on the profitable growth plan it announced at the start of the year, citing cost structure and go-to-market changes and post-acquisition synergies.

Guidance for the full fiscal year 2022 reaffirms revenue growth of 16.0% to 20.0%. The company raised full-year adjusted EBITDA guidance to $1.0 million to $10.0 million, a 0.0% to 2.0% margin, from an earlier range of negative $20.0 million to $0.0 million. For the second quarter, revenue guidance implies 11.0% to 13.0% growth year over year, with adjusted EBITDA of negative $9.5 million to negative $5.5 million. Non-GAAP gross margin is guided to 70% to 72% for the second quarter and the full year. Management also said it expects positive cash flow in the fourth quarter of 2022.

The risk list is long. LivePerson points to its ability to retain and attract personnel and manage staff attrition, strain on personnel and infrastructure from a growing customer base, integration of past and future acquisitions, delays in implementation cycles, customer payment risk, volatility in the capital markets, competition, privacy and regulatory changes, and security breaches. It also flags its operations in Israel and Ukraine and the potential for armed conflict there, plus foreign currency and cryptocurrency exchange rate swings. Revenue retention for enterprise and mid-market customers landed within the 105% to 115% target range in the first quarter, after exceeding the high end of that range a year earlier. No single customer accounted for 10% or more of total revenue in the quarter.