Summary
LivePerson closed fiscal 2022 with fourth-quarter revenue of $122.5 million, down 1.1%. Full-year revenue was $514.8 million, up 9.6%. The top line softened in the quarter, but the annual growth shows the Business segment still expanded. Profitability improved on a quarterly basis. The fourth-quarter operating loss narrowed to $38.9 million. Net loss narrowed to $41.7 million. Operating margin was -31.8%, up 4.8 percentage points. The full-year picture was much weaker. Operating loss widened to $221.9 million. Net loss widened to $225.7 million. Diluted loss per share widened to $3.03. Full-year operating margin fell to -43.1%, down 23.2 percentage points. The quarter's improvement in operating margin came alongside a revenue decline, so cost controls likely played a role. The full-year loss includes significant non-cash and restructuring charges that management excludes from adjusted measures.
Cash generation turned positive in the fourth quarter. Operating cash flow was $17.4 million, up 153.6%. For the full year, operating cash flow was -$62.1 million, down 2012.6%. Capital expenditures were $13.3 million, up 11.7%. Full-year capital expenditures were $48.5 million, up 6.1%. Deferred revenue, current portion, fell 14.5% to $84.5 million. Remaining performance obligations rose 9.5% to $397.3 million. The RPO growth offers some visibility into future revenue, while the deferred revenue decline suggests billings timing or renewals shifted. Management said approximately 88% of remaining performance obligations is expected to be recognized during the next 24 months. The deferred revenue decrease was primarily driven by cash payments received or due in advance of performance obligations, partially offset by revenue recognized from the prior-year balance. The full-year cash burn reflects the net loss and working capital changes.
Management highlighted several operating metrics. Trailing-twelve-month average revenue per enterprise and mid-market customer was approximately $680,000 in 2022, up from approximately $610,000 in 2021. Revenue retention for enterprise and mid-market customers on Conversational Cloud stayed within the target range of 105% to 115% in 2022 and 2021. Professional services accounted for 20% of total revenue in 2022, up from 14% in 2021. Monthly hosted Business services accounted for 73% of total revenue, down from 78%. The company completed the WildHealth acquisition in February 2022 and continued integrating e-bot7, Tenfold and VoiceBase. It also launched or deepened partnerships with Celonis, Afiniti, Cisco and CBA. Restructuring costs rose to $20.0 million in 2022 from $3.4 million in 2021 as LivePerson realigned its cost structure. Stock-based compensation expense increased to $109.6 million from $69.7 million. Adjusted EBITDA was a loss of $16.2 million for 2022, compared with positive $29.1 million in 2021. Adjusted operating loss was $48.5 million, compared with adjusted operating income of $1.7 million. The ARPU increase and retention within target suggest the core enterprise base remains engaged, even as the company works through integration and cost reduction.
Guidance for 2023 focuses on capital spending. LivePerson does not expect total capital expenditures to exceed $40.3 million in 2023. The company said current cash and cash equivalents and cash from operations should be sufficient to fund those expenditures. Liquidity remains a key risk. Management believes current cash and cash equivalents will satisfy working capital and capital requirements for at least the next 12 months, but it also warned that additional funds may be required and that financing may not be available on favorable terms. Other risks include legal proceedings and litigation, which could require accruals and materially affect results. The company increased its allowance for doubtful accounts from approximately $6.3 million to approximately $9.2 million during 2022. It also recorded an $80.5 million increase in its valuation allowance against U.S. and Germany deferred tax assets. The Consumer segment is classified as held for sale as of December 31, 2022. Restructuring and acquisition integration costs remain a drag on profitability. The filing notes that the company has incurred net losses and negative cash flows for various periods since inception, which keeps the focus on execution and cash discipline.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $122.5M | $129.6M | -5.5% | — | — |
| Gross profit | $76.1M | $85.9M | -11.4% | — | — |
| Gross margin | 62.1% | 66.3% | -4.2 pp | — | — |
| Research & development | $37.1M | $44.7M | -17.0% | — | — |
| Sales & marketing | $46.5M | $49.4M | -6.0% | — | — |
| General & administrative | $28.5M | $32.2M | -11.5% | — | — |
| Total operating expenses | $161.4M | $178.1M | -9.4% | — | — |
| Operating income (loss) | -$38.9M | -$48.5M | +19.7% | — | — |
| Operating margin | -31.8% | -37.4% | +5.6 pp | — | — |
| Net income (loss) | -$41.7M | -$43.2M | +3.5% | — | — |
| Net margin | -34.1% | -33.4% | -0.7 pp | — | — |
| Diluted EPS | -$0.56 | -$0.56 | ±$0.00 | — | — |
| Customers | 18,000 | — | — | — | — |
Risks
The company identified a material weakness in internal control over financial reporting as of December 31, 2022, tied to WildHealth transactions and deficiencies in review of non-core complex transactions, government agency engagement, segregation of duties, and manual journal entries. Remediation is ongoing, but the company cannot guarantee the measures will be sufficient or prevent future material weaknesses.
Expansion into digital healthcare through WildHealth poses substantial new risks, including lack of healthcare industry experience and compliance with HIPAA, anti-kickback, telehealth, licensure, and third-party payor rules. COVID-19 testing revenue has decreased and is expected to cease entirely.
The company must service $230.0 million of 0.75% convertible notes due 2024 and $517.5 million of 0% convertible notes due 2026, which will need to be refinanced. Operating cash flow was negative $62.1 million for FY2022, and cash and cash equivalents decreased to approximately $391.8 million as of December 31, 2022.
Gainshare pricing is contingent on customers achieving financial objectives such as increased revenue or reduced operating costs. Failure to achieve these objectives, including due to inflation, recessionary pressures, decreased consumer confidence, or normalized shopping trends, could reduce revenue and cause the program to operate at a financial loss.
The company recorded a net loss of $225.7 million for the year ended December 31, 2022, and had an accumulated deficit of approximately $692.4 million as of December 31, 2022. It may incur losses in the future, which could materially and adversely affect the market price of its securities.
If the sale of Kasamba is completed, the company will exit the consumer segment, which generated approximately 7% of total revenue for the year ended December 31, 2022. Future results would then depend solely on the Business segment.
The planned migration of technology infrastructure to the public cloud is a major undertaking that could disrupt operations, delay customer migration, cause service interruptions or data loss, increase cyber threats, and create unanticipated expenses. The company will also rely more heavily on third-party public cloud providers with limited control over their operations.
Sales cycles can be several months or more, and quarterly sales have historically reflected an uneven pattern with a disproportionate percentage occurring in the last month, weeks, and days of each quarter. This makes revenue prediction difficult and increases the risk of unanticipated variations in operating results.
The business depends on retaining existing customers and selling additional services, and customers typically subscribe for twelve-month terms with no obligation to renew. The interaction-based fee model can produce greater revenue variability because revenue depends on the number of interactions customers generate.
Downturns in the global economic environment or in industries where sales are concentrated may adversely affect the business. Gainshare is specifically exposed to inflation and recessionary pressures, decreased consumer confidence, and normalization of pandemic-specific shopping trends.
During 2022, the allowance for doubtful accounts increased from $6.3 million to approximately $9.2 million. A large proportion of receivables are due from larger corporate customers with longer payment cycles, which has made operating results harder to predict and contributed to significant unanticipated revenue fluctuations.
Issues in the use of AI in product offerings may result in reputational harm or liability. New and evolving products using AI, machine learning, and blockchain can raise ethical, technological, legal, and regulatory challenges that may negatively affect demand.
A substantial portion of product development, help desk, and online sales support operations are in Israel, with 171 full-time employees as of December 31, 2022. Armed conflicts, political instability, boycotts, and military reserve service could disrupt operations and harm results.
The business depends significantly on retaining senior management, key sales executives, and key development personnel. Remote work arrangements may make recruitment and retention harder, and significant staff attrition could impair customer relationships, product delivery, and financial results.
Deferred revenue, current portion, was $84.49 million at FY2022 Q4, down 14.5% versus the prior-year quarter. Because subscription revenue is recognized over the term, declines in business may not be immediately reflected in operating results.
SaaS KPIs
All quarters →Remaining Performance Obligations
Summary, forecast, risks and KPIs are extracted from LIVEPERSON INC's SEC filings for Q4 FY2022 (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.