LivePerson, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's third quarter 2021 earnings conference call. My name is Hector and I will be your conference operator today. At this time, all participants are in a listen-only mode. After the prepared remarks, the management from LivePerson will conduct a question and answer session and the conference participants will be given instructions at that time. To give everyone the opportunity to participate, please limit yourself to one question and one follow-up. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Ms. Idalia Rodriguez. Please go ahead.

Thank you, Hector. Joining me on the call today is Rob Locasio, LifePersons founder and CEO, and John Collins, Chief Financial Officer. Please note that during today's call, we will make forward-looking statements, which are predictions, projections, and other statements about future results. These statements are based on our current expectations and assumptions as of today and are subject to risk and uncertainties. Actual results may differ materially due to various factors, including those described in today's earnings press release and the comments made during this conference call. And in 10Ks, thank you. and other reports we file from time to time with the SEC. We assume no obligation to update any forward-looking statements. Also, during this call, we will discuss certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release. Both this press release and supplemental slides, which include highlights for the quarter, are available in the investor relations section of Life's Persons website. And with that, I'll turn over the call to Rob. Rob?

Thanks, Adalia. Thank you all for joining Life First's third quarter 2021 earnings call. I'm thrilled to report strong results for the third quarter. Revenue was in the top half of our guidance range and increased 25% year-over-year to $118.3 million. Our adjusted EBITDA of $6.9 million at 5.8% margin was also in the upper half of our guidance range and reflects planned investments in the business. And as I will discuss more in a moment, during the quarter, we also signed the largest contract in my person's 20-year history of being public. Reflecting on what we've achieved, I'd like to note that in 2019, we put out a long-term target to grow at 25% in 2021. We exceeded that target in 2020, a full year ahead of schedule, have now grown at 25% or greater in the sixth quarter in a row. While we continue to focus on adding more quota-carrying capacity and evolving our strategy for conversation AI and voice, we're very focused on creating the next set of foundational layers that will enable us to become a multi-billion dollar revenue company within the next several years. What powers our big ambitions is our singular focus on being one of the leading AI companies in the world. The raw material to AI leadership is a rich data set This provides a foundation to build a very powerful platform to deliver high-quality automated conversations. In this quarter, we hit a new milestone of 1.5 billion conversations on our platform, demonstrating the breadth and depth of our data assets and further strengthening our moat for delivering high-quality conversational AI. In the world of AI, the holy grail is to have the machine learn and then correct itself without human intervention. And we are now about 12 months out from having self-healing AI on our platform. This is where the bot knows that it's not delivering a positive experience with the consumer. And then we'll make some small talk and then take a different path to correct the conversation. The bot uses historical conversational data to learn and correct itself. And this is why our massive data set is so important to our platform vision. As our innovation continues at a very high pace, we need to match that with sales and marketing capacity. During the height of the pandemic in 2020 and into the beginning of this year, we focused most of our field resources on the demand of our install base. The install base continues to take most of our capacity, which is a really good thing, but we must continue to ramp additional capacity so we can go after new logos and opportunities. We hired Tony Owens, as our president of worldwide field operations at the beginning of Q3, who was previously the president of Americas for Salesforce. And he is building momentum and adding new hires and leaders. We're attracting top leadership talent to scale focus roles across the company, like Mary Frato-Rowe, our new executive vice president for customer success. Mary previously held executive leadership roles at Yext and Salesforce and has proven track record in scaling businesses and customer-facing operations. reports to Tony who shares with Mary the experience of being a leader at Salesforce when they were growing at a very high rate. Our field leaders stand alongside our outstanding tech leadership, including Andrew Hamel, who joined us two years ago from Amazon, where he led the development of Tier 1 services and tech initiatives related to Amazon's core search platform and other machine learning-powered experiences. The past two years at LivePerson, Andrew has worked closely with our technology and field teams on critical cross-functional initiatives supported our ongoing build out a world-class AI team and focused on key strategic and operational goals. With Andrew's technology strength and focus on scaling operations and innovation, we're confident they were the right team to capture the go-to-market and innovation opportunities ahead of us. You may have heard me speak about wanting to kill contact center voice when we first launched our messaging platform four and a half years ago. I still don't believe in traditional contact center voice platforms, cloud or no cloud. as they are perpetuating the old customer care model that is expensive and creates a poor consumer experience. In this day and age, contact center agents are mostly used because the brand does not have an interface or API between a legacy back-end system and the consumer intent. Voice is the most natural interface for people to express their intent. Our goal is to give every brand their own voice AI system to deliver beautiful, high-quality conversational automations. High-quality conversations require the machine to have a real-time understanding of consumer sentiment and other markers of conversational quality, and also deep integration into legacy backend systems. This is why we recently acquired VoiceBase and Tenfold. These acquisitions will dramatically accelerate our vision to have our AI-based services span across the channels customers care about, inclusive of voice and messaging. As we bring together the expertise and technology of our three organizations, we'll create a unique, unified, deeply integrated voice conversational AI to our platform. VoiceBase is a world-class voice analytics platform for the enterprise built on advanced speech recognition technology that transforms voice conversation into easily interpreted data and actionable insights. By unifying it with live person's conversational AI, we expect to give brands unparalleled visibility and customer intent, sentiment, frustrations, and successes for a much wider set of conversations across both messaging and voice channel, as well as traditional third-party contact center systems. Connecting messaging and voice data insights makes it easy to improve customer experience, uncover sales opportunities, and understand agent productivity and utilization. Tenfold is a leading enterprise-grade customer experience integration platform, enabling enterprises to modernize customer experience tools without having to replace legacy backend systems. Beyond legacy integrations with Tenfold, live person's messaging will be available to agents embedded in their CRMs with legacy voice agent desktops or even in the brand's proprietary contact center systems. This will provide unparalleled flexibility for brands to work with any voice vendor and complement live person's messaging by enhancing agent experience and productivity. These two strategic acquisitions open up new horizons for us. First, they make it possible for brands to have complete visibility and intelligence across conversations and messaging and voice, and deliver them with AI and automation. They also bring voice intelligence and AI technologies to support live persons' upcoming voice capabilities within our world-class conversational cloud. All told, we expect voice-based and tenfold to accelerate our strategy in helping brands create high-quality engagements within their customer conversations in every channel, including voice. We anticipate bringing AI-powered voice offerings to the market in the first half of 2022. Returning to our third quarter results, the metrics reflect a very positive growth trajectory. We signed seven seven-figure deals in the quarter, as well as an eight-figure expansion. A long-standing customer, one of the biggest telcos in the United States. Proud to say this renewal, our fourth with this customer, is the largest contract in my person's history. The SPRAM was one of the first to share a vision for messaging, We're excited to continue partnering with them. Our vision of putting AI at the center of scaling conversational commerce also continues to be validated, as we saw customer adoption of AI continue to drive platform usage in the third quarter. Volume on our conversational cloud continues to rise, increasing 5% sequentially and 18% year-over-year to a new high watermark. Our total AI-enabled volume increased 50% year-over-year. Messaging volume has particularly increased 40% year over year as we accelerated migrating customers away from traditional synchronous chat into asynchronous messaging experiences that better fit today's customer preferences. Among the many interesting items of Q3, I'd like to highlight some trends we saw in healthcare. Back in 2019, we set our sights in healthcare as a key new vertical. Today, we have partnerships with several big customers in the industry. In Q3, we signed the first phase of a new contract with the 10 largest healthcare companies in the world. The brand plans to improve consumer experience and agent efficiency by using web and in-app messaging to serve its customers, currently driving 250 million calls per year into its call center. They also plan to leap straight to automation, leveraging our conversational AI tools to create highly scalable self-service journeys. There's another trend in healthcare around testing. Brands all across the industry are looking for a solution to manage COVID-19. With spreading variants in the Biden administration's vaccine and testing mandate, testing is becoming an even more routine part of daily life. We continue to see a major opportunity for conversational AI in testing, an opportunity that is already evident in Bella Health. Life First is helping brands deal with the challenges of bringing employees back to the office, through Bella Health, which is already being used by 25,000 employees at 750 locations around the U.S. With our turnkey technology testing solution, we can source, deliver, and help manage workplace rapid testing programs, all powered by a very supportive conversational AI. All of these trends in healthcare show our potential in this vertical, which has a very large TAM, third-party research estimates that American telehealth market is expecting to grow to over 43 billion by 2026, at a CAGR of over 28%. As evidenced by Bella Health, AI is critical for any strategic initiative to scale in the healthcare space. At LivePerson, we have both the flexibility and AI expertise to quickly capture the massive opportunity here. We're allocating more technology and go-to-market resources in healthcare as a result. I'd like to highlight a new customer in the retail vertical. One of the largest sporting goods retailers in the world signed a seven-figure multi-year deal in Q3 and recently launched our conversational cloud to enhance the sales experience. It started with web messaging and automation and plans to expand to additional messaging channels as well as expanding further into commerce. This brand will also be using our Maven Pay platform, meaning it uses our tech to make it easier, secure, and seamless for customers to make payments directly within messaging conversations. Maven Pay contains conversational commerce within the conversation itself, rather than making customers go outside the messaging interfaces to complete their transactions. Our success and experience with large retailers, along with our innovation, automation, and AI capabilities, helped us seal the deal to transform the digital channels and accelerate growth. In addition to exciting new customers and key verticals, we're also seeing continued strength in our relationship with our long-time customers. many of which expanded their partnerships with LivePerson and Q3. These deals also point to an important trend. Customer brand that signed with us for our strong customer care solutions are increasingly moving into commerce with us as well. In a post pandemic world, we expect brands move away from just coping with the crisis toward long-term planning for digital transformation, shifting volume to messaging and automation as soon as possible. They will increasingly bring care and commerce journeys together to let customers enjoy natural conversational experiences carrying context and continuity across all channels. Let me shed some light on this theme with our existing customers. Additional notable way in the quarter is our strategic multi-year expansion with another long-term customer, The Home Depot, the world's largest home improvement retailer. Over the course of our 10-year partnership, we worked together to continually increase The Home Depot's messaging volume on our conversational cloud. This renewal was fueled by the growing volume and our proven ability to help drive revenue and reduce operational expense for the brand. As our strategic partnership grows, we plan to continue to support Home Depot's focus on digital customer experiences, using automation to drive more efficiency and scalability, and offering industry-leading shopping and customer service experiences on channels including web messaging, SMS, Apple Business Chat, and Google Business Messages. We also expanded into Q3 with one of the largest beauty and cosmetic companies in the world. We've implemented automations driving a conversion rate up to 22% on their website, and are continually leveraging our AI tools and sales and marketing solutions to streamline the shopping experience for online and mobile consumers. In another win for the quarter, we expanded our 10-year-plus long relationship with one of the world's largest entertainment and media companies with a seven-figure ACV multi-year contract. We're helping them unify the consumer journey across channels by shifting calls to messaging and powering their in-app experience. Over the long term, our predictive analytics are expected to help them diagnose the health of their conversations. And our proactive messaging and embedded commerce capabilities are expected to help them re-engage and take payments in seamless in-app experiences. Finally, evidence of our strength of our long-term relationships can also be found in our gain share offering. In Q3, we launched a strategic playbook for gain share, customizing it around brands' desired outcomes. One of our biggest gain share customers is one of the world's largest home improvement retailers, and they've been leveraging the program and our expertise for everything from automation to deployment to agent training. Within a year, we've seen the automation rate go up to 60% of all conversations. We trained 600 messaging agents during the pandemic to support the brand, saving their retailer an estimated $100 million in expenses. Simultaneously, we built and scaled their personalized connections with consumers, doubling their average online shopping cart value and generating more than $520 million in incremental revenue in a year. We strongly believe this tremendous success can be replicated across other brands. A notable game-share deal in Q3 was our expansion with ANZ Bank, one of the three largest banks in Australia. ANZ aims to drive higher percentage of digital transactions over the next 12 months, and our team plans to help manage mobile app messaging and accelerate automation across the banking platform. As a long-standing customer, ANZ trusts LivePerson for our comprehensive conversational AI capabilities, our ability to provide the right talent, and our expertise to help upskill their workforce, enabling them to transform to a digital focus first on customer care moving forward. In closing, LivePerson is very well positioned for continued strong growth. With great execution, our team continues to focus on go-to-market initiatives and capitalize on the demands in the market. We have a tremendous market opportunity with only 20% messaging penetration to date. Moreover, we see the opportunity to expand our current TAM through the deployment of voice AI and automation technologies within our platform. Our acquisition of Tenfold and VoiceBase is the first step to realize this massive opportunity. And given our proven ability to execute, we believe that we will continue to achieve strong results in Q4 and meet our 2020 growth target. With that, I'll turn the call over to John to provide more color on our financial and guidance. John?