Summary
LivePerson's fourth quarter of 2023 showed the cost of a shrinking top line. Revenue fell 22.1% to $95.5 million. For the full year, revenue fell 21.9% to $402.0 million. Management tied the decline to the exit of lower-margin and non-core business lines, the sale of Kasamba, and lower hosted services and professional services revenue. Profitability remained under pressure. The fourth-quarter operating loss widened to $40.7 million, and operating margin was negative 42.6%, down 10.8 percentage points. The fourth-quarter net loss narrowed to $40.5 million. On a full-year basis, the operating loss narrowed to $111.4 million, the net loss narrowed to $100.4 million, and diluted loss per share narrowed to $1.28. Full-year operating margin was negative 27.7%, up 15.4 percentage points.
Cash generation weakened in the quarter. Fourth-quarter operating cash flow was $4.5 million, down 73.9%. Full-year operating cash flow was negative $19.8 million, an improvement. Capital expenditures were $6.2 million in the fourth quarter, down 53.1%, and $28.7 million for the full year, down 40.9%. Deferred revenue was $81.9 million, down 3.1%. Remaining performance obligations were $317.5 million, down 20.1%. On a non-GAAP basis, fourth-quarter adjusted EBITDA was $3.7 million, compared with an adjusted EBITDA loss of $5.2 million in the prior-year quarter. Adjusted operating loss was $4.0 million, compared with $16.1 million in the prior-year quarter. Free cash flow was negative $1.7 million in the fourth quarter, compared with positive $4.1 million in the prior-year quarter. Full-year free cash flow was negative $48.4 million, compared with negative $110.6 million in the prior year.
Commercial activity offered some bright spots. LivePerson signed 62 deals in the fourth quarter, including 16 new logos and 46 existing customer contracts, with 3 seven-figure deals. Trailing-twelve-month average revenue per enterprise and mid-market customer rose 11.9% to $610,000, up from approximately $545,000. Revenue retention for enterprise and mid-market customers on Conversational Cloud was approximately 95%, below the target range of 105% to 115%. Management said the company is in a critical transformation period and pointed to a multi-billion dollar market opportunity. The company is actively marketing a sale of WildHealth, which contributed revenue in the fourth quarter, including some delayed Medicare reimbursement. The MD&A also flagged headwinds in expansion and retention, cancellations, downsell, and customers canceling on shorter notice.
Guidance points to another year of contraction before a possible stabilization. For the first quarter of 2024, management guided revenue to $79 million to $83 million on a like-for-like basis that excludes Kasamba revenue generated in the first quarter of 2023. First-quarter adjusted EBITDA is expected to range from negative $2 million to $2 million. For full-year 2024, management guided revenue to $300 million to $315 million on the same basis. Full-year adjusted EBITDA is expected to range from $15 million to $26 million, with margin of 5.0% to 8.3%. B2B Core recurring revenue is expected to represent 92% of total revenue. Risks include revenue retention below the target range, a lengthy sales cycle, the need to refinance the 2026 Notes, and the company's substantial indebtedness. The company also faces ongoing litigation and restructuring costs, and it recorded a goodwill impairment tied to WildHealth. The path to profitable growth depends on execution of the rebuilt sales and customer success motion.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $95.5M | $101.3M | -5.8% | $122.5M | -22.1% |
| Gross profit | $58.6M | $69.4M | -15.5% | $76.1M | -23.0% |
| Gross margin | 61.4% | 68.4% | -7.0 pp | 62.1% | -0.7 pp |
| Research & development | $29.9M | $35.6M | -16.1% | $37.1M | -19.6% |
| Sales & marketing | $32.4M | $32.1M | +0.8% | $46.5M | -30.3% |
| General & administrative | $21.6M | $30.4M | -29.2% | $28.5M | -24.3% |
| Total operating expenses | $136.1M | $145.0M | -6.1% | $161.4M | -15.7% |
| Operating income (loss) | -$40.7M | -$43.7M | +6.9% | -$38.9M | -4.5% |
| Operating margin | -42.6% | -43.1% | +0.5 pp | -31.8% | -10.8 pp |
| Net income (loss) | -$40.5M | -$53.3M | +24.0% | -$41.7M | +2.9% |
| Net margin | -42.5% | -52.6% | +10.2 pp | -34.1% | -8.4 pp |
| Diluted EPS | -$0.52 | -$0.68 | +$0.16 | -$0.56 | +$0.04 |
Risks
Revenue retention for enterprise and mid-market customers on Conversational Cloud was approximately 95% in 2023, below the target range of 105% to 115%, and MD&A cites headwinds in expansion and retention, cancellations, downsell, and customers canceling on shorter notice.
The company has $517.5 million in aggregate principal amount of 0% Convertible Notes due December 2026 that need to be refinanced, and it is reviewing its capital structure with no assurance that financing will be available on favorable terms.
As of December 31, 2023, cash, cash equivalents, and restricted cash were approximately $212.9 million, a decrease of approximately $179.3 million from December 31, 2022; FY2023 operating cash flow was negative $19.8 million, though it improved by $42.3 million versus FY2022.
FY2023 revenue was down 21.9% to $402.0 million and net loss was $100.4 million; accumulated deficit was approximately $857.0 million as of December 31, 2023.
Markets for digital engagement and AI technology are intensely competitive, and the company must add AI, machine learning, and automation; MD&A notes LLM evolution enabled bot-building in minutes and headcount reduction, but failure to innovate could lose revenue and market share.
Prior to completing public cloud migration, the company is exposed to risks from legacy infrastructure, prior customization, aging systems, and third-party technologies; it experiences cyber-attacks regularly and remote work arrangements may increase incident risk.
Sales cycles can be several months or more, and quarterly sales have historically been uneven with a disproportionate percentage occurring in the last month, weeks, and days of each quarter; implementation lags have typically ranged from 30 to 90 days and may take longer.
Gainshare pricing is contingent on customers achieving financial objectives such as increased revenue or reduced operating costs; failure to achieve these objectives would reduce recognized revenue and could result in operating the program at a financial loss.
The company appointed a new Chief Executive Officer at the end of 2023 and depends on key sales and development personnel; changes to senior management could lead to additional unplanned losses of key employees.
Plans to migrate technology infrastructure to the public cloud are a major undertaking and could disrupt operations, cause data loss, delay customer migration, increase cyber threats, and create unanticipated expenses.
The business is subject to evolving U.S. and international laws regarding privacy, data protection, and AI; increased public scrutiny could lead to more regulation, industry standards, and legal obligations.
A substantial portion of product development, help desk, and online sales support is in Israel, with 93 full-time employees as of December 31, 2023; ongoing Israel-Hamas war and regional instability could disrupt operations.
Non-payment or late payment from a significant number of customers may hurt financial condition; allowance for credit losses increased from $9.2 million to approximately $9.3 million during 2023, and longer payment cycles have caused revenue fluctuations.
The company recorded an $11.9 million goodwill impairment and a $3.0 million intangible impairment for WildHealth in 2023; future declines in stock price, market capitalization, or cash flow estimates could require additional charges.
SaaS KPIs
All quarters →Adjusted EBITDA
Free Cash Flow
Adjusted Operating Loss
Total Deals Signed
Expansion Renewals
New Logo Deals
Summary, forecast, risks and KPIs are extracted from LIVEPERSON INC's SEC filings for Q4 FY2023 (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.