Summary
LivePerson reported first quarter fiscal 2026 revenue of $57.0 million, down 12% from the prior-year quarter. The decline reflected lower hosted services and professional services, which management tied to customer cancellations and downsells. Operating loss narrowed to $1.8 million. Net loss narrowed to $8.8 million. Diluted loss per share narrowed to $0.73. Operating margin improved to negative 3.1%, an increase of 23.1 percentage points. The bottom line still shows red ink, but the loss is much smaller.
The company continued to shrink its cost base. Headcount at period end fell across functions. Cost of revenue headcount was 147, down from 179. Sales and marketing headcount was 121, down from 229. General and administrative headcount was 102, down from 137. Product development headcount was 236, down from 351. Those reductions followed restructuring activities. Management said the 2025 restructuring activities were substantially completed as of December 31, 2025. The lower headcount helped reduce expenses, but it also raises questions about capacity to support growth.
Revenue retention remains the central problem. Management said it continues to see slower than anticipated renewals and new business bookings. Customers are uncertain about LivePerson's financial stability. Broader macroeconomic and industry factors are extending enterprise buying cycles, including for high-value AI solutions. Because subscription revenue is recognized over the term of a customer contract, declines in bookings may not show up immediately in operating results. They could still hurt revenue over the long term. That lag makes the current quarter's revenue decline less than a full picture of demand.
Cash flow and backlog metrics show mixed signals. Operating cash flow was $9.5 million, an increase of $12.6 million. Capital expenditures were $2.6 million, down 29.7%. Deferred revenue, current portion, was $58.0 million, down 5.6%. Remaining performance obligations were $161.7 million, down 26.9%. The RPO drop is steep and points to pressure on future revenue. The company says its current cash and cash equivalents will be sufficient for at least the next 12 months. However, management cannot assure that additional funds will not be required. The indenture governing the 2029 Notes requires a minimum cash balance of $60.0 million at all times. Proceeds from the 2029 Notes may be used only for specified purposes, including paying interest or cash settling the 2029 Notes, cash settling the Warrants, refinancing the 2026 Notes, or paying related fees and expenses.
On April 21, 2026, LivePerson entered a merger agreement with SoundHound AI and Lightspeed Merger Sub. Merger Sub will merge into LivePerson, with LivePerson surviving as an indirect wholly owned subsidiary of SoundHound. The deal adds strategic uncertainty. Risks include slower renewals, customer concerns about financial stability, macroeconomic and industry factors, and longer enterprise buying cycles. The 2026 Notes, 2029 Notes and Second Lien Notes are subject to repurchase at the option of holders if the company undergoes a Fundamental Change. They also carry events of default that could accelerate amounts owed. Management warns that additional funds may be needed. If financing is unavailable, the company may have to further reduce sales and marketing and product development efforts. That could materially hurt financial condition and operating results. The company also faces aggressive investment in artificial intelligence by competitors with significant resources and investment capital.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $57.0M | $59.3M | -3.9% | $64.7M | -12.0% |
| Gross profit | $41.4M | $43.4M | -4.5% | $46.5M | -10.9% |
| Gross margin | 72.7% | 73.2% | -0.4 pp | 71.8% | +0.9 pp |
| Research & development | $12.2M | $11.5M | +6.3% | $16.0M | -24.0% |
| Sales & marketing | $13.8M | $14.2M | -3.0% | $23.5M | -41.4% |
| General & administrative | $12.1M | $8.7M | +38.6% | $16.8M | -27.8% |
| Total operating expenses | $58.7M | $100.0M | -41.3% | $81.6M | -28.1% |
| Operating income (loss) | -$1.8M | -$40.7M | +95.7% | -$16.9M | +89.7% |
| Operating margin | -3.1% | -68.7% | +65.6 pp | -26.2% | +23.1 pp |
| Net income (loss) | -$8.8M | -$46.1M | +80.9% | -$14.1M | +37.5% |
| Net margin | -15.5% | -77.8% | +62.3 pp | -21.8% | +6.3 pp |
| Diluted EPS | -$0.73 | -$5.34 | +$4.61 | -$0.24 | -$0.49 |
Risks
Completion of the pending merger with SoundHound is subject to stockholder approval and regulatory approvals, many of which are outside LivePerson's control, and the agreement may be terminated if the merger is not consummated by the end date. Failure or delay could materially adversely affect LivePerson's business, results of operations, financial condition, and stock price.
Required regulatory approvals may be delayed, not obtained, or granted with conditions such as divestitures or restrictions on the combined company's business. These outcomes could disrupt operations or reduce the anticipated benefits of the merger.
MD&A states LivePerson continues to observe slower than anticipated renewals and new business bookings, driven by customer uncertainty about its financial stability and broader macroeconomic and industry factors extending enterprise buying cycles, including for high-value AI solutions. Revenue decreased 12% to $57.0 million for the quarter and RPO decreased 26.9% versus the prior-year quarter.
Merger-related uncertainty may cause LivePerson to lose management and other key employees, and the combined company may struggle to retain or attract critical personnel. Headcount at period end declined across cost of revenue, sales and marketing, general and administrative, and product development functions.
If the merger closes, the combined company may fail to realize anticipated benefits and cost savings, and integration may disrupt ongoing businesses, lose key employees, or cause customers, suppliers, or vendors to terminate or scale back relationships. Unknown liabilities and unforeseen expenses from the merger could also adversely affect the combined company.
LivePerson had an accumulated deficit of $1,067.3 million as of March 31, 2026, and the indenture governing the 2029 Notes requires a minimum cash balance of $60.0 million. The company may need additional funds and cannot assure that financing will be available on favorable terms, if at all.
MD&A notes a competitive environment characterized by aggressive investment in artificial intelligence and other technological innovation by competitors with significant resources and investment capital. Product development costs decreased 24% to $12.2 million for the quarter due in part to restructuring activities, which may affect the pace of innovation.
Litigation relating to the proposed merger may be filed against LivePerson, SoundHound, or their boards and could prevent or delay closing, result in damages, or create substantial costs and management distraction. The outcome of any such actions is uncertain.
The merger agreement restricts LivePerson from soliciting alternative business combination transactions and generally requires it to conduct business in the ordinary course, limiting its ability to respond to competitive pressures, industry developments, or future opportunities. These restrictions could harm its business, operating results, and stock price.
The value of the SoundHound stock consideration is uncertain because the exchange ratio depends on LivePerson's future cash balance and other variables, and the deemed SoundHound share value is subject to a $7 floor and $12 ceiling. LivePerson stockholders will also have reduced ownership and voting influence in the combined company.
Summary, forecast, risks and KPIs are extracted from LIVEPERSON INC's SEC filings for Q1 FY2026 (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 2, 2026.