LivePerson, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's fourth quarter 2021 earnings conference call. My name is Rob, and I'll 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 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 Richard Gu, Senior Vice President, Investor Relations and Strategic Finance. Please go ahead.

Thank you, operator. Good afternoon and thank you all for joining us today. On the call with me are Rob Lacascio, LivePersons 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 risks 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 10-Ks, 10-Qs, 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 non-GAAP financial measures. Reconciliations of GAAP to non-GAAP financial measures are included in today's earliest press release where applicable. Both the press release and supplemental slides, which include highlights for the quarter, are available in the investor relations section of LivePerson's website. And with that, I'll turn over the call to Rob. Rob?

Thanks, Richard. Thank you for all for joining the LivePerson's fourth quarter 2021 earnings call. We're really pleased with our fourth quarter performance, which capped a strong finish to the year. Q4 revenue was within the upper half of our guidance range and grew 21% year-over-year to $123.8 million. Our full year 2021 revenue grew 28% to $469.6 million, which is a record high in our company's history and a major milestone for a live person. Our Q4 adjusted EBITDA loss of $4.4 million was much better than our midpoint of guidance of $19.5 million, as we are very focused right now on profitable and leverageable growth. For the full year of 2021, we achieved an adjusted EBITDA of $29.1 million, which equates to $6 0.2% adjusted EBITDA margin. Our performance demonstrates the strength and momentum of our core conversational AI platform as we continue to execute our strategy, becoming one of the leading AI and automation companies in the world. COVID was an unprecedented event, bringing on both opportunities and challenges for companies worldwide. We took advantage of the demand surge during COVID with our flexible game share model, as well as valuable learnings from our COVID testing business which allowed us to make further inroads in the healthcare sector. In the meantime, we're carefully navigating the nuanced economic environment in 2022 by continually focusing on our core business and other growth areas by strategically deploying capital to drive clear and profitable, leverageable growth, and by working closely with our customers. In Q4, we continue to see robust platform usage with conversational cloud volume growing 44% year-over-year for AI-based conversations, and 28% year-over-year for total messaging conversations. Throughout the quarter, we saw strong traction for land and expand and upsell deals amongst our enterprise install base, especially in the U.S. In the U.S., the top e-commerce platform signed an eight-figure TCV deal with LivePerson. This was an increase in ARR by seven times over the past three years. What makes this deal notable is voice base, which we recently acquired, was also able to sign one of its largest deals with the same customer. We're really optimistic that the synergies between our platforms will drive future incremental value. One of our notable new logo wins during the quarter was with a credit card issuer that provides branded credit cards for approximately 150 retailers around the world. This seven-figure win will help improve the customer experience for their private label credit card clients. Our automation capabilities were key to this win, as well as our ability to integrate messaging capabilities directly within their apps, rather than requiring them to run sensitive conversations through third-party channels. Some of our international markets gained momentum in Q4. I'm pleased with the progress we made in the UK and signed one of the three largest utility companies in the country as a seven-figure new logo deal for Gainshare, which is also partner-led. Virgin Media O2 continues to transform their entire digital footprint within their services and commerce business, and is a testament to the power of our AI capabilities. APAC saw new logos in the education telco verticals, and we also signed renewal with one of the largest retailers in the world through one of our channel partners in Latin America. By working with LivePerson, they are leveraging AI and automation to reduce operating expenses and transition from voice to messaging. This brand is on the forefront of innovation and has improved their sales conversion rate by three to four X by offering grocery shopping, via WhatsApp and proactive messaging for tracking and delivering conversational AI technology. In Q4, we expanded our relationship with one of the largest cryptocurrency exchanges and this brand began their journey with LivePerson by using our tool sets like Intent Manager, Conversation Builder to ramp up automations and high volatility in the crypto space has driven increased usage of our platform. Our solution enables agents to resolve customer questions quickly and efficiently and they're migrating volumes away from an incumbent CRM provider that provides email and online ticketing. Since we began working together last December, this brand has increased their annual spend with us by nearly 400%, indicating their reliance upon and trust in our solution. Reflecting on our product strategy, we originally launched messaging four and a half years ago, the first company to do that, with a focus on customer engagement. The name of the platform originally was LiveEngage. And two years ago, we evolved LiveEngage into the conversational cloud with a clear vision to power entire businesses around conversational AI and conversational commerce beyond customer engagement and care. Last week, we launched our new branding and positioning called Curiously Human to reinforce the broader power of our platform in providing digital experiences that feel more human because they understand, connect, and deliver better outcomes for brands and consumers. Over the past four years, we've made tremendous progress in developing our conversational AI platform. And by the end of the year, we should be at a place where our automations will have the ability to self-heal, which is a north star for any AI platform. This will give us the ability to generate a large scale of interactions on our platform in both messaging and upcoming voice channels. Over the past five years, we've built a half a billion dollars business in the enterprise customer engagement space. However, the conversational cloud was really designed to be a powerful cloud platform for many different industries. We expect 2022 to mark the next leg of our strategy with the delivery of our voice AI capabilities across the entire platform. And also, we will now start expanding into our third largest vertical, which is healthcare. In 2020, the US spent approximately 20% of its GDP on healthcare. The healthcare industry is going through a major technology change and we see conversational AI playing a meaningful role in that change. Over the past two years, we have been going deeper into the healthcare space with the signing of some of the largest insurance providers. We've also been working with one of our largest and longstanding US banking customers who asked us to build an AI that could deliver in-home rapid antigen COVID testing with the high efficacy as they were having major issues with business continuity. We created that offering almost two years ago. We serviced over 35,000 employees and administered nearly 4 million tests in two years. One of the benefits of entering the COVID testing market was our work with many of the world's leading diagnostic testing companies and also building relationships with scientific and medical experts. We believe there's a massive opportunity beyond COVID testing and taking in-home testing specifically around genomics and combining it with AI analytics and conversational AI experiences to ultimately deliver precision medicine to a broad segment of the population. We are starting the development of this healthcare offering with a recently signed eight-figure deal to build a conversational AI service on the conversational cloud to deliver a series of consumer diagnostic testing experiences. We're excited about this new opportunity and ability to go deeper into a vertical that's already providing us with a lot of profitable and leverageable growth. There's plenty of room for growth in the enterprise segment, especially given our strength and relationships with our customer base. Our core enterprise business saw continued momentum in Q4 with seven seven-figure deals, as well as strong renewals and expansions. Revenue retention was once again within our target range of 105% to 115%, making the 18th consecutive quarter that revenue retention was within or above our target range. Average revenue per customer, or ARPU, was up 31% year-over-year, driven primarily by sustained install-based expansions for our business. With our recent acquisitions of VoiceBase and Tenfold, we have even a greater opportunity to catalyze the upsells and cross-sells as we stay focused on weaving voice into our AI offerings. This year, we'll put a renewed focus on profitable and leverageable growth by strengthening our balance sheet and sticking with a framework that has enabled us to navigate being public, being a public company for over 20 years. In Q4 alone, our EBITDA number was 15.1 million better than our midpoint of our guidance as we controlled spending in the core business to align it with revenue growth rates. Although we started ramping up resources in Q3, we decided during Q4 that there was no need to reach 200 quota-carrying reps and the necessary supporting personnel to achieve our goals. We decided to return the global field operation to a path that we were on early last year around driving leverageable growth. As a note, the person who was running our global field operation during that time and for the prior two years, Manlio Corelli, had to take an unexpected leave in last June. Fortunately, Manlio returned a few weeks ago and we feel that he's a better fit to continue down the path that we are on in growing our revenues with real leverage. As a reminder, under Manlio, we hit four consecutive quarters of the rule of 40, and he oversaw the exceptional growth rates for the prior three years. In 2021, we achieved record top-line growth of 28%, surpassing our previous record in 2020. We drove total messaging volume growth by nearly 50%, all while maintaining solid EBITDA margins. Looking ahead to 2022, we're gonna take this time to focus on our foundations of strengthening our business model while preparing for our next phase of exponential growth. Therefore, our focus for the year will be in the following three areas. First, we're gonna focus on balancing growth with strong bottom line and build a deeper foundation for profitable and leverageable growth. Second, on the platform side, deliver our new voice AI capabilities, which will expand our overall TAM. We'll also deliver on our AI capabilities to get one step closer to our vision of an autonomous, of automations being curiously human. And third, expand into our next big vertical of AI-based healthcare with this new eight-figure deal and our vision around the conversational cloud powering healthcare experiences. Last but not least, I'd like to thank all of our employees for their hard work in making 2021 a great year and for making 2022 a really important foundational year. With that, let me now turn the call over to John to discuss the financials and our guidance. John?